Key Takeaways

  • Seller financing is the most common way to buy a business
  • Buying an underperforming business may be more feasible
  • Use a business broker to find the best business to purchase
  • Negotiate the terms of the sale based on whether you need seller financing

There are many ways to buy a business without money; thinking outside the box is the key. A common method is seller financing, which over 80% of business owners use to purchase a business. Since seller financing is more flexible than traditional bank loans, you don’t need to worry about perfect credit or a lot of capital. This makes it easier for many people to buy a business.

The key to buying a business without money is to understand the loan terms, the total cost, and which option is the most affordable given your financial situation. Seller financing, SBA loans, investing with a partner, and title loans are just a few options for buying your own business.

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Quick Tips for Buying a Business With No Money Down

  • Work with a business broker to find a deal
  • Look for motivated small business owners
  • Explore your financing options, including loans
  • Focus on the industries you have a passion for
  • Consider crowdfunding to make up the cash

How to Buy a Business With No Money: 5 Options

Buying a business without any money seems impossible. Business owners want to get paid; otherwise, why would they sell their business? Here are some alternative financing options to buy an established business with no money down.

1. Seller Financing

Seller financing is the most popular way to buy a business with no money. It may seem strange that the person selling the business would finance the sale, but it helps them unload the business. It also gives them rights to a percentage of the profits based on the agreement you create.

Usually, in exchange for seller financing, sellers get a specific percentage of the cash flow. It’s imperative to have a legal agreement between both parties. This ensures everyone is on the same page and you know exactly how much of the profits you must share.

In addition to sharing profits, some seller financing agreements include a down payment or installment payments, sometimes both. A down payment is money you pay upfront to buy the business. If you have some free capital, this may help you win an offer faster. If you don’t have a down payment, you can ask the seller if you can make installment payments. These are regular monthly payments to the seller with interest to pay back what you owe.

2. Small Business Loan

Small business loans (SBA loans) can help with the cost of buying an existing business, plus operating expenses, such as payroll, inventory, and marketing expenses. Also known as 7(a) loans, Small Business Administration loans have strict qualifying guidelines, including:

3. Invest with a Partner

It may seem scary to invest with a partner, especially if you want a 100% say in the business’s decisions. However, a silent partner offers the best of both worlds. They invest money in a business they believe will be successful but has nothing to do with the day-to-day operations and decisions.

This can be a good option if you can’t find a business owner who will offer 100% seller financing. For example, you may find a business owner offering 80% financing. You must come up with 20% but don’t have the capital. A silent partner can contribute the 20%, giving you 100% of the sales price, without giving up any control over the business.

Keep in mind that you’ll share your profits with your partner, but on a pro-rated basis, depending on the percentage they invested.

4. Buy an Underperforming Business

Many times, businesses are for sale because they can’t turn a profit. Buying an underperforming business might seem like a bad idea, but it could be a lucrative investment if you know how to turn it around. Since business owners who can’t earn a profit are typically motivated to sell fast, they may be more willing to accept an offer with no money down rather than wait for a better offer.

Businesses often fail because the owner doesn’t update the company’s technology or learn new techniques the industry has adopted. Many are set in their ways and don’t have the time or energy to change things and let their business’s success go. They’d often rather sell the business and let someone who understands the changes take over and make it profitable.

5. Title Loans

Title loans can be a unique way to borrow money to buy a business. While these loans are best for emergencies, they can help make up the difference between owner financing and the purchase price.

Title loans use your car as collateral. You must own a car without any loans and prove you can repay the loan. Your credit score isn’t a defining factor in qualifying, and you don’t need employment income, just steady income from a reputable source.

Many title loan lenders fund loans the same business day or by the next day, allowing you to have the capital needed to make an offer on a business and close the transaction quickly.

Steps to Buy a Business With No Money

Whether you’re buying a business with money upfront or no money, there are some important steps to take before purchasing.

  1. Identify Your Goals and Passions

Decide why you want to buy a business. Things to consider include:

  • Is this your main source of income?
  • What business model do you prefer?
  • Are you trying to retire early?
  • Is this a passion you want to follow up on?

Knowing your goals for the business can help you make the right selection. This is also an important step when creating your business plan. Knowing what you are good at, the type of business you want to own, and your financial goals will help make your business venture successful.

For example, if you’re running the business as a side hustle and will keep your 9 to 5 job, you need a business that doesn’t require much attention. If you purchase a business you don’t have the time or capital to run, it could be a bust. But, if you’re going ‘all in’ and making this your main source of income, you’ll have more time and resources to focus on the business and may have more options.

  1. Find the Right Business

Finding an existing business is a challenging task. There are many for sale, but identifying which ones are profitable or fit your financial goals requires professional help. Business brokers can help you identify the best business deals, negotiate the sale, and handle complicated paperwork. Like real estate agents, business brokers know firsthand which existing businesses are for sale and would fit your criteria.

When working with business brokers, look for those with experience in the industry you’re considering purchasing a business and a proven track record. Ask about their past sales, and see if you can talk to other business owners they’ve helped to see if they’re right for you.

  1. Negotiate the Terms

Negotiating the terms of the deal is the most important step. First, determine if you’ll use seller financing or your own money for the purchase. If you’re asking for seller financing, you should focus on the financing terms, not the purchase price.

Because you want to propose seller financing to close the sale, you may want to focus on giving them the asking price but then negotiating the loan terms. This includes the percentage of profit they’ll receive or the monthly payments you’ll make. Consider offering interest rates higher than the current market rates to sweeten the deal. The key is to sweeten the offer so the seller feels they are getting the best deal.

If you’re using your own money or money borrowed from other sources, such as an SBA or title loan, you can negotiate the price rather than the terms. Just like buying a house, keep the seller’s needs in mind and get to know the details of why they’re selling to make the most attractive offer. The more information you have about the business acquisition and the seller’s needs, the better you can tailor your offer.

  1. Close the Deal

The final step is to close the deal. You do this once you’ve negotiated the terms, obtained financing, and signed the legal contracts. During the closing, the current owner must transfer authorization for all tasks, bank accounts, and other legal aspects of the business.


Can I Get a Loan to Buy a Business With No Money Down?

A secured business loan is the easiest way to get a loan to buy a business with no money down. When banks have a ‘guarantee’ of repayment, they are more likely to lend the funds. Because not having a down payment is risky for lenders, collateral is the best way to work around it.

What is the Minimum Down Payment for an SBA loan?

Every borrower gets different terms, but on average, the SBA requires a 15% down payment on loans of $150,000 or less. They require a 25% down payment on loans over $150,000.

How Hard is it to Get a $2 Million Business Loan?

A $2 million business loan is tough to qualify for because it puts lenders at great risk. To qualify, most lenders require great credit, a proven track history, and enough revenue to prove you can afford repayment.

Does SBA Have a Minimum Credit Score?

The SBA doesn’t state the minimum credit score they require. They only state business owners must be creditworthy. It’s best to aim for a credit score of 680 or higher to qualify for this type of business loan.

Final Thoughts

Buying an existing business without money is possible, and you have many options. Seller financing is the most popular method, but it’s not the only one. If you need additional financing options, consider small business loans, bringing on a partner, or borrowing money with a title loan to get the necessary capital.

If you’d like to explore your options for auto title loan financing, contact one of our professionals today to see how to get started. You can also apply online to determine your eligibility with no commitment required.