From the monthly archives: December 2009

We are pleased to present below all posts archived in 'December 2009'. If you still can't find what you are looking for, try using the search box.

Why You Should Consider Selling Your Business in 2010

The 2010 new year brings with it the time when business owners review their strategic plan and business goals. Many of the owners we talk to are wondering if this is the year to consider selling the business. In Texas, there are five specific reasons why it would make sense to sell in 2010. There are many factors that determine best timing for selling a small business -- the financial condition of the company, valuation, growth cycle, profit history, and the current market. Usually the best time to obtain the highest price occurs when sales and earnings are good and trending upward with a history of good performance. This gives buyers confidence in projected future earnings. Value is dynamic and proper timing makes a big difference in the prices paid for business acquisitions. External factors such as the economy, industry trends, stock market volatility, competition, investor confidence, interest rates, and geopolitical considerations are cycles of constant change that impact value. Internal condi ...

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SBA Update - What's Happening in Congress

On Thursday December 10th, Sens. Landrieu and Snowe introduced S. 2869, the Small Business Job Creation and Access to Capital Act. This new bill contains a series of measures that were separately introduced by Sens. Landrieu and Snowe earlier this year. The Senate Small Business Committee will mark up S. 2869 Thursday, December 17th. Highlights of the legislation include: Increase the loan limit on 7(a) loans from $2 million to $5 million. Increase the loan limit on 504 loans from $1.5 million to $5.5 million. Increase the loan limit on microloans from $35,000 to $50,000. Allow the 504 loan program to refinance short-term commercial real estate debt into, long-term, fixed rate loans. Extend the authorization to provide 90 percent guarantees on 7(a) loans and fee elimination for borrowers on 7(a) and 504 loans through December 31, 2010. Direct the SBA to create a website where small businesses can identify lenders in their communities. Increases the maximum guaran ...

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11 Knows Before Selling Your Business

Know that your asking price is based on reality...a reality that buyers and their lenders can believe in. The buyer will look at return on investment and their lenders will require that the deal makes sense in terms of debt repayment. A multiple of Discretionary Earnings is one method that can be used to establish a reasonable price range.

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Selling Your Business? Get it Pre-Qualified

As I mentioned in one of my previous blogs, the Small Business Administration (SBA) has relaxed some of their policies in regards to lending. I said before that they “became a lot more flexible by making changes to the acquisition policies impacting purchases which included Intangible Assets. These changes give “Preferred Lender Providers” (PLP) more flexibility to provide business loans WITHOUT going through the SBA for final approval. In addition to providing PLPs with greater flexibility, the changes give buyers more leeway in the minimum amount of equity they must invest for the project.” So, how does this benefit sellers and buyers? Well, sellers whose businesses: (1) have good financial records (normally three (3) years worth of tax returns) ; (2) generate enough cash flow to cover the repayment of the SBA loan AND the buyer’s life style and; (3) are selling their business for at least $300K, may get lenders to Pre-Qualify their listing for an SBA loan. Note: I used the $300K, because most lenders l ...

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Retirement Funds Can Finance A Business Acquisition

Qualified retirement accounts such as 401(k), 403(b), Pension, Profit Sharing, and IRA rollovers can put you on the path to business ownership. You can also use these funds to buy a business with no taxes, no penalties, no loan repayment and no hassle. Qualified money is money with a tax beneficial wrapper around it because it was accumulated in a tax-benefited plan. Many people have been building retirement accounts with much of their money in qualified retirement vehicles. If these accounts are improperly accessed (unwrapped"), they stand to be hit with up to a 50% tax penalty in state and federal income taxes, depending on tax bracket and state of residence. So, the question to be answered is, "How can a person access their retirement funds to purchase a business without paying a penalty or income tax?" There are three primary ways to gain access to "qualified" retirement funds for use in a business acquisition WITHOUT incurring penalties and taxes. 1) Self-Directed IRA This option essentially ...

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