How to Buy a Business With No Money

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You don’t need a ton of cash to become a small business owner. Learn how aspiring entrepreneurs can buy a business without any upfront money. [[{“value”:”

Many aspiring entrepreneurs would be interested in buying a business that’s already up and running because it seems safer. And that is true and makes sense.

Starting a business from scratch is tough. You need to wear many hats, potentially take out a small business loan to grow your business, and manage day-to-day operations. But when you buy an existing business, the kinks are usually worked out. Given that half of all small businesses fail, if you found one that has been around a while, that alone is a good sign.

That said, buying a business takes money, right?

No, not always.

Here are ways to buy an existing business with no money out of your own pocket.

1. Seller financing

One of the most common ways to buy a business with no money is through seller financing. This is akin to when someone buys a home and the current owner “carries the papers,” meaning the homeowner acts as the bank. The home buyer in this case simply pays the owner directly for a certain length of time until the home is paid off.

In this case, it’s a business you are buying without any money, rather than a house. In this arrangement, the owner/seller agrees to finance part or all of the purchase price. Instead of paying the small business owner upfront, the buyer agrees to make payments over time.

This type of deal can benefit both parties. The seller can receive a steady stream of income for a few months or years and the buyer gets a business without the need for large cash reserves.

To secure seller financing, two things are needed. First, you need a motivated seller willing to enter into such an arrangement, and second, you will need to demonstrate your ability to run the business and show that your business bank account will support ongoing payments to a seller (or that you can obtain financing to cover them).

2. Leverage the business’s assets

Another way to buy a business with no money is by using the business’s own assets to finance the purchase. This is often referred to as asset-based lending. The idea here is that you borrow money against the business’s assets, such as its inventory, equipment, or accounts receivable, to fund the acquisition.

Banks or private lenders may offer asset-based loans. Why? Because the assets secure the loan. The loan is much less risky that way; if you don’t repay, the lender just forecloses on the asset(s).

So yes, if the business you want to buy has enough valuable assets, you can use them to secure a loan, making it easier to acquire the company with little to no money out of your own pocket.

Nice, right?

3. Partner with an investor

Finally, if you do not have the money to buy a business, finding a partner or investor who does is another viable strategy. You could partner with someone who has the financial resources that you lack. They offer the actual equity, and you offer what is called “sweat equity.” You do the work and run the business, and they provide the funding.

Of course, in exchange for putting up the funds, the investor will want a share of ownership or a portion of the profits.

The good news is that this approach again allows you to avoid using your own money to buy the business. And an added bonus is that you also get the benefit of having a financially savvy business partner who can help you successfully run the business.

So yes, as they say, there is more than one way to buy a business with no out-of-pocket funds. Just make sure it is a viable and profitable business you are buying, so you will definitely be able to pay the piper when the time comes.

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