During the economic downturn, many small businesses ran into trouble when attempting to sell. Profits fell for small businesses across many industries. This led to the valuation of many companies taking a hit during this time. And, even if buyers were interested, tighter restrictions on credit meant they may not have been able to obtain financing to make the acquisition. Due to this, many small business owners found it nearly impossible to complete a sale of their small business.|
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But, an improving economy has led to a change in the small business landscape. Small business revenue is up across many industries, with cash flows positive and profits improving. This makes many small businesses very desirable to buyers. Many potential buyers chose to save amid the uncertainty of the past few years and are now ready to look for an investment with a proven record of growth. If your business has posted gradual or increasing revenue over the past three years it will likely be looked at favorably by both banks and buyers when assessing a deal.
Restrictions on access to credit have also been loosened in recent months. Increased access to credit is making it easier to buy and sell small businesses. According to The Wall Street Journal, the U.S. Small Business Administration (SBA) increased lending significantly in the third quarter of 2013. A total of $5.3 billion in small business loans was lent compared to $4.3 billion in the third quarter the previous year.* SBA loans can be used for acquisitions of existing businesses as well as for establishing a new business, or expanding a current one. Therefore an increase in lending could mean a much larger pool of buyers looking at your small business as a potential acquisition.
Interested in buying instead of selling?
American River Bank offers commercial lending solutions, including SBA 504 loans, for you to purchase, improve or build your business projects. Contact us today at (800) 544-0545 to speak with a business banker.
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* Source: The Wall Street Journal, Oct. 23, 2013.