Hi! If you can prove that it is profitable, I think it's entirely possible. Some times banks will require a thorough business plan in order to even be considered for financing.  You may want to talk to a local banker for some advice on this topic.   Charles Monkey Joes To Go

You will have two issues you have to contend with.  How well the business is doing financially, including how long it has been operating and maintaining or growing it's profits.  And how much experience does the buyer have in that industry or in business in general.  And you have to have decent credit.   If you're good on both of those then it shouldn't be too hard.  Just realize that getting a loan lately is a little bit harder then it used to be.  I would start with applying for an SBA loan.

It is entirely possible - but as explained here - it will depend on the strength of the business and you (your credit). SBA loans are picking up with easier requirements (part of the stimulus package) - might call a bank who offers these loans and ge their package - you can then find a SBDC (free service) to help you fill out the package. You could also ask your friend to owner finance. Let's say you come up with 10% down and she finances the rest - might be the easiest way - you can repay her out of the busiess profits the same as you would pay a bank loans.

Jennifer,   If you're considering buying the business, I would suggest that you do your business plan first.   Besides it being one of the most important things that you can do when you're considering starting any new venture; if you eventually do decide to go through with the purchase, you're lender will probably require you to have one anyway...and the stronger the plan, the better your chances are of you successfully securing financing for it.       There are some great resources on the SBA web site to get you started (http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html) and, although it will take a bit of time to put together, it can be one of the best things that you can do to get that financing and to keep your business running strong once you do.    I hope that helps...   -Tony 

Jennifer1556- This is an interesting question. I see you've already gotten lots of advice and tips from your fellow members. If you have more detailed questions about financing, I would recommend posting them in the Loans, Grants, and Taxes board where they will be more visible to others with interest/expertise in that area. best of luck, Nicole

just a bit of a advice when buying business :)   if you are buying from a friend thats fine.. otherwise make sure you check the income they say from different means... i have met people who brought resturants thinking they are busy though its actually not.. old owners have just fooled them

You should offer some kind of partnership or revenue sharing with any of your friend or relative who is interested in your idaes and ready to invest some money to buy this shop

Now, just because a business you are buying is profitable doesn't mean a bank is going to lend you money to purchase it. The question the loan officer will want to know is what is your 'Collateral' or basically what will be used to pay back this loan if the business fails. Just like with an auto loan, the car itself is collateral and is taken if you default on payments and resold to make up for the lose. I would consider using alternate methods of financing, perhapes a home equity loan or finding investors to get on board with you. You would also need 'atleast' 3-4 years worth of profit\loss and tax information for the current company if you do go the direct business loan route. Maybe check out the SBA.gov website and see if any resources there can help out.

The valuation of the business is a huge issue when buying and financing a business. Proving that it is profitable is good. Proving that there are assets is good. But a true 'valuation' includes things like 'net profit before taxes', and takes into account the salary of the owner. A boutique like you are describing is probably operated as a sole proprietorship, one of the hardest kinds of businesses to value -- the financials are usually pretty fuzzy. Ask your local banker for steps to take to get a clear valuation of the business. Perhaps s/he can recommend someone in your area who does that type of work, or perhaps there is a formula that you can figure out yourself. But do that valuation whether or not you can get funding. It will tell you pretty quickly if you are paying too much for the business. MaryAnnBusiness Plan MasterThe Business Plan for a Tough Economy ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

I cannot speak to the ability of getting financing, but I can tell you what you must get if you do decide to purchase the business: GET THE PHONE NUMBER! Yes, I know some people are rolling their eyes at that advice, but I know of a guy who purchased a roofing business for $75,000 and all he got in exchange were some old tools and a beat up $1,000 truck. He didn't get the phone number to the business. It's a long and funny (well, not really) story. But the moral of the story: get the phone number! The person who sold the roofing business kept the old phone number to himself which was a landline and took the good jobs for himself and gave the purchaser the deadbeat clients. I know that won't happen to you...but thought I'd throw that out there. Message Edited by sbbarca on 06-14-2009 09:19 PM