How does one obtain a business loan without any collateral or rich relatives?

I'm in need of 400.000 I don't have any assets. I'm a young widow with two children and 2500.00 a month social security. I want to buy a business that is established and I 'm confident I can do this but haven't found the financing.

By "no assets", I am making the assumption that you do not have a sufficient down payment to attract bank financing (20%). This is even through the SBA...I would not waste my time just yet with a business plan and other time consuming activities that have been suggested here. $400,000 is a lot of money for a business (especially if there is not a lot of assets to the business, including real estate) The business should be producing somewhere around $100,000 to $150,000 a year for the owner. If this is the case, this is a substantial committment for a single mother to tackle and I can almost gurantee you that no "angel investors" will even consider this. This is also true for the banks...unless you have good credit, about $80,000 cash down payment, and experience in the industry. The suggestion to go for owner financing is a good one. However, again, I make the assumption that you do not have any money for a down payment...in this situation, it is extremely unlikely that an owner would be willing to work with you. I hate to be the answer that is full of gloom...but you may be trying to bite off more than you can chew at this time. Have you considered saving up some money and starting your own business? Even one similar to the one you are considering purchasing. This will be a great way to get started into the world of small business ownership...not strapping yourself with $400,000 worth of debt that could ruin you financially.

and you won't.

Go to the small business association and they can guide you on what to do.

No lender will talk to you unless you provide them with a valid business plan. Go to http://www.sba.gov , http://www.score.org or http://www.bplan.com for sample business plans and instructions on how to write a business plan.

Then, go to http://www.score.org/ and in the upper left hand corner, enter your zip code. On the next screen, you will get information on the nearest SCORE chapter. Call them and arrange for a free meeting with a SCORE counselor to review your business plan and discuss various loan options available to you.

SCORE is a nonprofit association dedicated to entrepreneur education and the formation, growth and success of small business nationwide. SCORE is a resource partner with the U.S. Small Business Administration (SBA).

SCORE has 389 chapters in locations throughout the United States and its territories, with 10,500 volunteers nationwide. Both working and retired executives and business owners donate time and expertise as business counselors.

If you have a down payment you might be able to talk to the current owner about a lease option. Other then that you need to work on your corporate credit. That is if you have a corporation. The only thing left after that is angle investors. You can goggle search for start up investors.

I suggest you negotiate with the current owner to finance the sale. If he knows the business is viable and will make a profit he will be more willing. If the seller has NO interest in financing then do not buy the company. He knows something you do not and you are getting set up to take his fall.

Even if you get some financing most business purchases will keep the owner's final payment amounts against unforseens, warranties, "ghost" inventory, etc. You will also need seller to enter long term non-compete agreements.

It is best if the current owner finances and the business is his sole collateral. It is good if some amount of his final payment is tied to your success. I do not encourage cash payments for businesses.

Good luck