How to buy a business with NO money

I’ve mentioned before that it’s totally possible (and realistic) to buy a business without spending a ton of cash.

This might sound too good to be true... but it’s actually not!

Most W2 employees simply don’t know this is possible — which is why so many people mistakenly think you need to be rich to buy a business.

There are three main ways of structuring a deal that allow you to either put NO money down, or just a small portion of your own money up front.

Let’s take a look at each, plus their pros and cons.

Starting with one of my favorites:

SBA loans

This is one of the most effective (but misunderstood) strategies in business.

I’ve used SBA loans myself for multiple deals, and I’ve helped hundreds of my students use them to buy their own businesses.

(For an in-depth guide on how to get an SBA loan, check out this video I recently released)

Pros:

The leverage is amazing (up to 90%).

And if you structure it right, you can pay zero out of pocket while still claiming full ownership of the business!

Cons:

Getting approved for a loan is tough.

It requires a good credit history, collateral, and a good resume to show the bank that you’re the right person to buy this business.

And if the business fails, the SBA and the lender can go after your personal assets to pay themselves back.

Capital raises

Pros:

This spreads the financial risk by raising capital from multiple investors.

Investors can bring valuable expertise and connections.

This lets you raise funds than the other two methods — so you can use any overage as working capital to grow the business.

Cons:

If you take investor money, you’ll have to split the equity, the profits, and the decision-making authority.

And, the pressure is higher, because investors will expect a return on their investment.

Seller financing

Pros:

The seller takes on all the financial risk, so they’ll be heavily invested in a smooth transition of ownership, and in making sure the business succeeds.

This also costs less cash (or none at all) compared to the other two methods.

Cons:

Most sellers won’t be willing to do this kind of deal, so it’ll take longer to find and negotiate for it.

And... that’s a wrap!

I’ll do deeper dives on each of these financing methods in future emails.

But hopefully this gives you a better lay of the land.

If you’re in a comfortable six-figure job, but you’re ambitious, crave financial freedom, and want to be your own boss...

Consider buying a small business.

It’s an often-overlooked path to entrepreneurship… one that’s less risky (and potentially more profitable) than building a company from scratch!

To learn more about how to acquire a small business, or passively invest as a silent partner:

Fill out our 2-minute Investor Survey here, and tell us what types of deals you’re interested in.

More acquisition tips and strategies coming your way soon!