Question:

I have owned and operated a Domino’s franchise for five and a half years and now I have found an under-priced pizza restaurant in Hawaii. The problem is due to certain events I obtained a lot of bad marks on my credit report, which was great five years ago or I would not have gotten a loan then. I have never been late on an SBA payment or to the bank. How can I get the needed $50,000 start-up capital? The owner has agreed to finance another $20,000.

Answer:

You have a number of options available to you, but first I want to understand if you have any available capital at all?

You have to approach this deal with the realization that you do not have a lot of leverage financially.

The only factor in your favor is that the business is being sold at a discounted price.

Therefore,

you must prepare a proper presentation to potential lenders that outlines this facet very clearly.

For purposes of this answer, I shall assume not. The most logical place for you to go first is the bank that financed your Domino’s business. They are the ones with a history on you. Second, should that fail, is to approach anyone or institution with whom you’ve had a successful financial relationship. Next, any possible personal friends/family members who you could bring on as a silent partner?

Should you exhaust all of these avenues without any luck, then the seller in Hawaii is your only resource. Since this business is under-priced to begin with you should approach him/her with two deal scenarios:

• To buy part of the business now with an agreed upon buyout over the next 2-3 years at a pre-determined formula thus lowering the amount you need upfront.

• Pay them more than their asking price but have them hold a larger note. If the business is priced below what you believe it should be, then you should have no problem paying them more if they’re willing to finance more.