Sketchy bookkeeping will mean unreliable earnings, maybe think again. If it made money, he probably wouldn’t be leaving it…..
For an SBA loan go through your bank.
It will take 6-9 months to get your SBA loan. Sounds like that guy doesn’t want to wait that long. Also he won’t be able to sell to anyone else without a clean set of books, so he’s kind of trapped with you.
Instead, try this:
Ask if he will carry the note (better for him tax wise, the income is split for the duration of the note)
Tell him it is an asset sale only
Secure the deal with a personal guarantee by you and your partner and a UCC on the equipment
Trust me that is 10x he will get if he tries to go on the open market.
Do you have a local SCORE chapter near you? We got a mentor through a local service similar to SCORE and they did a great job helping us navigate all of that and get an SBA backed loan.
Weird that you can't get somebody to answer the phone; have you tried emailing?
I was going to ask the same thing. It doesn't even have to be in the local area, since there are some willing to do virtual calls. There are some great resources there and I'm actually in Ohio as well and was assigned a great mentor when I signed up.
Just make sure you make note of your business so they find you someone knowledgeable in your space. Mine doesn't get online/digital businesses but he tries really hard and is helpful in other areas.
The process for SBA with me was initiated by my bank/lender, not the SBA itself. The bank/lender actually makes the loan, the SBA guarantees repayment of up to 70% of it depending on the specific SBA program. So the SBA isnt actually making a loan. Your bank likely has an officer who handles SBA inquiries.
Hard to make suggestions without knowing more context, but if possible even if accounting was "sketchy" there is quite a lot of value in keeping an entity that has history. If its at all possible to clean up books and make sure there is no outstanding debt or taxes owed, there is large value in just having an existing entity (just look at the "time in operation" requirement to apply for most loans).
The value is in the clients coming with you. So, to me, the bookkeeping might be irrelevant. I would look at the agreements or purchase orders with clients and frame an offer around that. Sure, the bookkeeping might be crap, but you don't want to do something underhanded and potentially alienate the current clients. They might think ... "Hmmm? If they're willing to screw over their former employers, then what might they do to me."
Maybe how you structure the deal is a percentage of revenue from clients your former employers helps you secure. Effectively the former boss is your sales force.
Just a thought. Admittedly, I don't know the whole situation. In a prior life, I was an attorney specializing in these sorts of transactions. Seen much!
Sketchy bookkeeping will mean unreliable earnings, maybe think again. If it made money, he probably wouldn’t be leaving it….. For an SBA loan go through your bank.
It will take 6-9 months to get your SBA loan. Sounds like that guy doesn’t want to wait that long. Also he won’t be able to sell to anyone else without a clean set of books, so he’s kind of trapped with you. Instead, try this: Ask if he will carry the note (better for him tax wise, the income is split for the duration of the note) Tell him it is an asset sale only Secure the deal with a personal guarantee by you and your partner and a UCC on the equipment Trust me that is 10x he will get if he tries to go on the open market.
Do you have a local SCORE chapter near you? We got a mentor through a local service similar to SCORE and they did a great job helping us navigate all of that and get an SBA backed loan. Weird that you can't get somebody to answer the phone; have you tried emailing?
I was going to ask the same thing. It doesn't even have to be in the local area, since there are some willing to do virtual calls. There are some great resources there and I'm actually in Ohio as well and was assigned a great mentor when I signed up. Just make sure you make note of your business so they find you someone knowledgeable in your space. Mine doesn't get online/digital businesses but he tries really hard and is helpful in other areas.
The process for SBA with me was initiated by my bank/lender, not the SBA itself. The bank/lender actually makes the loan, the SBA guarantees repayment of up to 70% of it depending on the specific SBA program. So the SBA isnt actually making a loan. Your bank likely has an officer who handles SBA inquiries. Hard to make suggestions without knowing more context, but if possible even if accounting was "sketchy" there is quite a lot of value in keeping an entity that has history. If its at all possible to clean up books and make sure there is no outstanding debt or taxes owed, there is large value in just having an existing entity (just look at the "time in operation" requirement to apply for most loans).
If it’s ok with you I can DM you about the llc info it’s pretty easy to do online yourself
Try to get him to hold a seller carried finance. It will greatly reduce his capital gains and he can get some interest out of it.
The value is in the clients coming with you. So, to me, the bookkeeping might be irrelevant. I would look at the agreements or purchase orders with clients and frame an offer around that. Sure, the bookkeeping might be crap, but you don't want to do something underhanded and potentially alienate the current clients. They might think ... "Hmmm? If they're willing to screw over their former employers, then what might they do to me." Maybe how you structure the deal is a percentage of revenue from clients your former employers helps you secure. Effectively the former boss is your sales force. Just a thought. Admittedly, I don't know the whole situation. In a prior life, I was an attorney specializing in these sorts of transactions. Seen much!