Fed cuts interest rate: What does it mean to Business Buyers?

So the Fed has cut interest rates again. How does this affect someone looking to buy a business? Well, not all too much.

It's still a great time to buy a business since the best way is to have a seller carry the note and not a bank. But the interest rate cut may only help you with your down payment.

Those lucky enough to have liquid accounts available for a down payment should use them. Many though, take money from equity in property. The rate cut may loosen the banks a bit to make it easier to get that equity money.

It seems ridiculous that you can't get YOUR money out of YOUR house but that's the way it works.

If you are really ready to buy a business and you have done your preparation and homework (hopefully with the help of my book and toolkit), then you will probably be able to convince friends and family to help you out instead of trying to tap house equity.

If you are taking the home equity route to get the deposit for buying a business, make sure you get approval before you bother a seller/broker. They will probably require it anyway.

The good news is that while money is tough to get from some sources, it makes sellers that are really ready to sell very willing to take a less money overall for the business and/or a much smaller deposit with a larger note.

Just be careful and make sure that if the business ran exactly how it does now but with you at the helm, it can cover the loan as well as your personal financial needs. Also take into account that the cash flow will probably dip a bit as you take over.

Those are my words to the wise this week when considering buying a business. Bargains on great opportunities are out there, but there is no point in looking if you have not prepared yourself yet to make this business buying venture one based on the strength of being a good and knowledgeable business buyer.


To Your Business Buying Success-

The Business Buying Guru