What is Necessary to Secure Financing for Buying a Company in Denver?
What is Necessary to Secure Financing for Buying a Company in Denver?
Purchasing an existing business in Denver can be a profitable and strategic investment—but it often requires significant capital. If you’re like most buyers, you’ll need to secure financing to complete the transaction. Whether you're acquiring a small retail shop in Cherry Creek or a manufacturing business in the Denver Tech Center, preparation is key.
Here’s what’s necessary to secure financing for buying a company in Denver.
1. A Solid Personal Financial Profile
Before lenders or investors provide funding, they want to know you’re financially stable. Most institutions will look closely at:
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Personal credit score (typically 680+ is preferred)
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Net worth and liquidity
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Debt-to-income ratio
The stronger your financial position, the better your chances of qualifying for favorable terms.
2. A Detailed Business Plan
Even though you're buying an existing business, lenders want to see your vision and strategy. Your business plan should include:
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Executive summary
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Market analysis (specific to the Denver area)
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Operational plan
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Revenue projections
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Exit strategy
This shows that you're not only financially capable but also strategically prepared to run the business successfully.
3. Business Financial Documentation
To assess risk, lenders will require documents related to the business you’re purchasing, such as:
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2–3 years of tax returns
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Profit and loss statements
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Balance sheets
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Cash flow reports
Make sure the current owner provides accurate and up-to-date financials. A reputable Denver business broker, like Peterson Acquisitions, can help ensure the documents are legitimate and complete.
4. Down Payment or Collateral
Most lenders, especially for SBA loans, require a down payment of 10–30% of the purchase price. In some cases, you may need to offer collateral, such as personal assets or other business interests.
Being prepared to invest some of your own money shows lenders you’re committed and reduces their risk.
5. Understanding Loan Types
To secure financing, it’s essential to know your options:
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SBA 7(a) loans – Backed by the government, ideal for business acquisitions.
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Conventional bank loans – Require strong credit and business history.
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Seller financing – The seller finances part of the sale.
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ROBS (Rollover for Business Startups) – Use retirement funds penalty-free.
Each type has different requirements, so consult a financial advisor or broker to find the best fit for your situation.
6. Expert Support
Navigating the financing process can be complex. Working with professionals makes a big difference. Consider hiring:
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A business broker to find and vet opportunities
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A CPA to help with financial documents
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A business attorney to review contracts
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A lender familiar with Denver’s market
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