Acquiring an online business can be a daunting task especially when it comes to securing the necessary funding.
Traditional financial institutions haven’t fully embraced this sector leaving many entrepreneurs with limited options.
Personal guarantees home equity loans or relying on friends and family for capital often come with restrictive terms.
Seller financing while a common alternative isn’t always feasible particularly for businesses valued under $800000 where full cash offers often win out.
But what if I told you that two buyers with a modest budget of $50000 managed to secure a $355000 online business in just 12 days without any of these traditional funding sources? Let me share their story a testament to the evolving landscape of online business acquisitions.
Unleashing Potential with Creative Funding
These buyers were seasoned Amazon FBA veterans who had already tasted success with their own online ventures.
They sought to expand their reach by acquiring an existing business leveraging their expertise and capital.
However their limited budget hampered their ambitions restricting the scale of their potential growth.
They had secured an offer for a business within their budget only to see the deal fall apart.
This setback inspired them to seek alternative solutions and that’s where our team stepped in.
We had recently established a connection with a private third-party lender who expressed a willingness to provide funding for qualified buyers.
This connection was a must.
We typically restrict buyers to unlocking listings no more than 50% above their verified liquidity to safeguard sellers from frivolous inquiries.
But with this new funding option these buyers could now access businesses seven times their original budget!
Finding the Perfect Fit: A Well-Established Amazon FBA Business
The search for the right business led them to a compelling opportunity: a three-year-old Amazon FBA business with a consistent track record of profitability.
This stability without erratic spikes or drops in earnings was a key indicator of its soundness.
The business also had several stock keeping units (SKUs) all variations of a single core product backed by thousands of positive reviews – a highly desirable trait for investors.
This product diversification and positive customer feedback instilled confidence in its long-term success.
The business’s streamlined operations were another plus: a simple supply chain requiring just two hours of the seller’s time per week.
The seller eager to focus on their studies was motivated to exit the business.
This combination of factors made this Amazon FBA business a highly attractive acquisition.
And thanks to our lending connection the buyers were able to submit an offer despite their modest budget.
A Unique Funding Solution: Revenue-Based Financing
The buyers made a down payment within their initial budget range with the remaining funds coming from the third-party lender.
This innovative funding approach known as revenue-based financing offers a unique alternative to traditional loans.
This lender composed of seasoned entrepreneurs and business owners with deep experience in tech and e-commerce is backed by venture capital firms and angel investors.
They have a waiting list of over 200 qualified business buyers eager to secure funding.
The repayment terms are structured around a percentage of the business’s revenue reaching a predetermined cap.
This cap is progressively increased over time starting with a lower amount in the first year.
The lender’s interest is aligned with the business’s success.
The funding agreement includes safeguards to ensure consistent revenue performance with penalties for significant drops in earnings over a defined period.
Safeguards and Security: Protecting Both Buyers and Sellers
To facilitate the transaction the buyers were required to complete an asset purchase agreement (APA) and establish an LLC for the business.
This LLC served as collateral for the loan granting the lender the right to seize the business if its performance consistently falls short.
To ensure a smooth transition the buyers also submitted a seven-day letter of intent (LOI) to expedite the LLC formation process and finalize paperwork with the lender.
This meticulous approach coupled with the lender’s efficient operating system allowed the buyers to close the deal within a remarkable 12 days.
Benefits for Both Buyers and Sellers
This new funding model offers substantial advantages for both buyers and sellers.
Tired of seeing deals fall apart because you don’t have enough cash? 🤯 This new funding source lets you acquire businesses up to 7x your budget! 💰 Learn more and find your dream business!
Sellers remain blissfully unaware of the funding source as the acquisition process remains unchanged from their perspective.
This expanded access to potential buyers significantly increases their selling options.
For buyers the ability to secure funding for larger businesses allows them to acquire assets generating greater cash flow surpassing what they could achieve with their initial budget.
Scaling Wealth Through Strategic Acquisitions
In this case study the buyers were able to acquire a business with a higher multiple than their original target generating significantly more earnings than a typical $50000 business.
The potential earning difference could be as high as 400%!
Unlocking Potential: Expanding Your Acquisition Capabilities
This third-party lender primarily focuses on Amazon FBA SaaS digital product and info product businesses valued between $300000 and $2 million.
Tired of seeing deals fall apart because you don’t have enough cash? 🤯 This new funding source lets you acquire businesses up to 7x your budget! 💰 Learn more and find your dream business!
They encourage buyers to invest a dollar for every four dollars they invest aiming to recoup their investment through the business’s monthly revenue.
The percentage of revenue the lender receives varies based on the business’s risk profile and model.
This percentage typically ranges from 10% to 50% with SaaS businesses generally having a higher revenue redemption rate.
Flexibility and Incentives: Repayment Options and Early Payoff Benefits
Early repayment is rewarded with a discount on the loan and the interest rate caps progressively increase over the years.
As a rule of thumb the repayment caps are roughly 15% in year one 25% to 30% in year two and 40% to 45% in year three.
If minimum repayments are made and the loan repayment extends to the maximum term the maximum interest rate reaches 60% or 1.6 times the principal.
Tired of seeing deals fall apart because you don’t have enough cash? 🤯 This new funding source lets you acquire businesses up to 7x your budget! 💰 Learn more and find your dream business!
However the lender also supports buyers using this funding as a steppingstone to secure traditional bank financing.
This allows buyers to build credit history and potentially secure more favorable loan terms.
This innovative lending solution empowers buyers with a streamlined path to acquiring online businesses enabling them to scale their wealth and unlock new opportunities.
Unlocking Your Acquisition Potential with Empire Flippers
Empire Flippers a leading curated marketplace for online businesses has helped people buy and sell over $510 million worth of businesses.
With our new lending partner you can now access funding quickly and easily to achieve your acquisition goals.
Create an account and add funds to your Wallet to begin searching for businesses eligible for funding.
Look for listings labeled with a “Lender Approved” badge indicating their suitability for this financing option.
Schedule calls with sellers negotiate terms and leverage this funding to acquire the business of your dreams.
Embrace the power of strategic acquisitions and unlock your full potential with the right funding and expert guidance.
The future of online business ownership is here waiting to be seized!