Tips on Financing to Buy a Website :: Sell Websites Buy Websites

Tips on Financing to Buy a Website Reprinted with permission of VotanWeb.com If you're like most people buying a website, you'll probably need to borrow money to complete the acquisition. Although, you may obtain a loan from friends or family, most buyers turn to a commercial lender for financing. Although different lenders specialize in making certain types of loans, you should be aware of the common principles, steps and business terms you're likely to see when dealing with any commercial lender. The major issues of importance when you are seeking a loan include the amount to be loaned, the interest rate, the fees and expenses charged by the lender in connection with making the loan, the term of the loan, the obligations (covenants) you'll have to meet while the loan is outstanding, whether or not a portion of the principal must be paid back each month, and the need for security or a personal guarantee to be posted. All lenders have what are known as "underwriting guidelines". These guidelines set out the facts and circumstances that need to exist in order for the lender to make a loan. Obtaining these guidelines or a summary of them, at the beginning of the process can help you determine if you are dealing with a lender who is likely to loan you money for your acquisition. Some lenders only make loans up to the SBA guarantee limit, others focus on particular industries, require minimum cash flow coverage or certain levels of security or personal guarantees. If, after reviewing the guidelines of a particular lender, you think you'll be able to meet all of the requirements; it's probably a fair bet to proceed with the process. If not, you should probably look for a different lender. The underwriting guidelines will also identify what types of due diligence materials you'll have to supply. A credit check, financial statements, management backgrounds, insurance certificates, governmental licenses and corporate documents are some of the most common types of due diligence materials you'll need to produce. It's important to be well organized, and to deliver all of the materials in a timely manner. The longer it takes you to deliver these materials, the more questions it may raise in the lender's mind about your qualifications. These guidelines generally list a number of other criteria as well. Some lenders may require that your financial statements be audited. This means that you'll need an independent accountant to review and express an opinion on your financial records.