If I took out a loan to invest in an existing business, would the business itself be the security or would I?

Would I have to put up security myself to enter into the investment or would the value of the existing business be enough for the bank to loan the money?

It depends on a business. On the size of collateral it provides. If it is not enough, the bank will request additional collateral from you. And if it is a small business the bank is most likely to request a personal guarantee.

You can calculate business collateral using this formula (keep in mind that it will not be very accurate, as I don't know what kind of business, how many people work in it , net income - is it declining?, etc.)

Collateral = (Real estate value*0.8 鈥?Mortgage) + Equipment value *0.5 + Inventory *0.1

Net income of the business might also be a collateral. But not if it is declining. Banks have different underwriting criteria regarding Net Income.

This is the best answer I can give you without known all details about business, sorry. But I hope it helps.

Sincerely,
Marina Lando
President
Business Loan Quest
http://www.business-loan-quest.com
http://www.blquest.biz

It depends on the legal form of the business. If it is a proprietorship you are responsible with all your assets. if it is a limited liability then the business is the security and you personally will not be liable

Tags

　　Capital Investment 　　Business Investment 　　Business financing 　　Business Invest 　　Business Debt 　　Bond Investment 　　Angel Funds 　　Alternative Investment

Related information

How do I invest in a business that I believe in?

Use google or Yahoo! search and look this stuff up. 1. Find out if the company even has shares of stock for sale. 2. If they do, then you'll have to follow these steps to buy the stock. ...

How reasonable is it to invest in a home business?

a home business can become very lucrative if you work at it. the biggest problem is in generating new business which is very difficult for the beginner. start it as a hobby and test the waters befo...

Who wants to invest in hotel business in saudi???

How much do you want for your land?

...

Wanting to invest in a business,we were advised to check first "the cost of money" in the international market

The cost of money refers to the interest rate a bank will charge you for it. There is no standard reference for this because banks will charge you a premium over the reference interest rate (or �...

Would you invest in a business that you love, or purchase you first home?

Investing in a business that you love can effect your judgment as to the quality of the investment (believe me I know). Your better off going for your first house and getting a real asset on your s...

How can i find investors that will invest in my business idea.?

First of all search for people second ask the bank there always important people. 3rd start of at a small market and increase to popularity.

...

What are the tax benefits when I invest in a business?

Depends on if you are investing or running or owning the entire business outright. Be more specific.

...

Have 10,000.00 want to invest in a business or start one, any suggestions?

what do you like. If investing in the stock market invest in products which you use or service companies which you already know about. If investing in a business or starting one yourself, I say t...