How to buy a business on a budget

You want to buy a business, but you don't want to drain your 401k, refinance your house, or liquidate your investment portfolio to make it happen.

I get it.

Most people think you need hundreds of thousands in cash sitting around to buy a business.

Not true!

I own seven businesses that generate over $850,000 a year in cash flow…

I've personally acquired over seven businesses that generate over $850,000 a year in cash flow, and the coolest part is…

And I've structured most of these deals with very little of my own money out of pocket.

It's thanks to something I've used called creative financing…

And it’s accessible to any normal person who wants to get into business acquisition.

Here’s how creative financing works 👇

At its core, creative financing is about being smart with the money you have.

If you can make $200,000 a year using the bank's money, why would you tie up $500,000 of your own cash when you could put it elsewhere?

It's the same reason rich people use mortgages to buy houses instead of paying cash.

Borrowing money lets you make more money by keeping your capital free to work for you.

I've worked with students making well over $300,000 a year who still use creative financing so they don't have to use their own cash to get deals done.

The foundation of this? SBA 7(a) loans

The SBA literally created these programs so people could buy businesses with little money down.

Here's how it works…

The government backs the loan from the bank that's giving you money.

That means the bank can give you way more leverage because the government is saying:

“Don't worry, we'll take care of you if this goes bad.”

This makes your bank feel way more comfortable lending to you, and allows buyers to bring only 10% to the deal to get it done.

Right now, SBA rates are hovering between 8-10% (typically prime plus 2%).

That might sound like a lot, but when you're talking about a business that can pay you 30%+ per year in return, it’s really not that bad.

You can borrow up to $5 million through the SBA, which covers most businesses for sale.

Plus, when you use creative financing, you're also forcing yourself to buy better businesses.

Why? Because now the bank has to approve the deal too.

They're going to do their own financial analysis to make sure it's a solid investment.

Plus, if something goes wrong with the business, you haven't risked your entire life savings compared to putting everything into one deal.

The business cash flow is what pays back the loan over time.

The real opportunity is in that 10% down payment

The SBA covers 90% of the purchase price.

That 10% down payment is where creative financing strategies come alive.

Instead of writing a check for that 10%, you can use seller financing or find an investor to cover it.

This means you can do deals with little to no money out of pocket.

I've helped students structure deals where that 10% down payment doesn't come from their bank account at all!

While everyone else thinks you need massive cash reserves to buy a business, smart entrepreneurs are using the system exactly as it was designed.

The SBA wants people to buy businesses and become successful business owners.

The bottom line

You don't need to be rich to buy a profitable business.

You just need to understand how to structure deals intelligently.

The opportunity is massive, and most people don't even know these financing options exist.

That’s why I do what I do!

Any time I come across a potential acquisition opportunity that I think my subscribers might be interested in, I send out a broadcast with the details.

To opt in to receive those emails, just fill out this 2-minute survey:

👉 I want to buy (or invest as a silent partner into) a business

Or if you’re selling your business, tell me more about it below. We’ll reach out if we find a good fit.

👉 I want to sell a small business (and I’m actively looking for buyers)

Onward,

— Ben Kelly