May 28, 2024

Financing the transmission and takeover of a business thanks to a professional loan.?

3 min read
Financing the transmission and takeover of a business

The resumption of an activity can be financed tax in part with a professional loan , calling on a broker in this type of approach can be of great help to you. The transfer of a business tax  can take several forms, the important thing is to properly assess your company for an agreement that is rewarding for both the transferor and the buyer. Discover our article!

What is business transfer?

The transfer of a business corresponds to the transfer by the assignor of a business. It can be the sale of a goodwill, the transfer of shares, right to lease or key money or even management rental. It’s a long process that requires great preparation and fully involves both parties. The transferor tax must be able to give all the keys necessary for the proper functioning of the company and the buyer must take into account all the specificities of the latter.How can we finance the resumption of an activity.?Several sources of financing are used for the resumption of an activity. It can be a personal contribution, a seller’s loan or a professional loan.

There are two types of transmission:

Transfer free of charge: this is the transfer of ownership of the company in the form of a donation, which often takes place  tax within the family circle. Also called a “donation-partage” if the transferor wishes to pass on his business to several people.Transfer for consideration  : this involves valuing the sale price of the business. The buyer can be part of the company’s current employees, but he can also be totally outside his activity.

How to value your business?

It is necessary to determine what makes the value of the company. The criteria are often different from the point of view of the tax  transferor or the acquirer. The acquirer bases himself on future profitability criteria while the transferor bases himself on the past, which he has already built. The value does not correspond to the price, the price is fixed during the negotiation and at the end of the agreement between the two parties. The negotiation will also make it possible to fix the commitments of each one.

As part of a business transfer, there are many tax advantages. It is important to get good information from specialized professionals .What are the criteria used by the bank in the context of a business transfer?There are three fundamental points that the bank will look closely at when requesting financing for the acquisition of a company:

The profile of the buyer(s)

The buyer’s ability to run the business is essential. A flourishing activity can collapse if this one is not up to managing the activity and leading the teams. The bank will look in particular at their profile, their professional experience and their motivations for the project.

The complete inventory and the balance sheet of the company

For the recovery of an activity to go as smoothly as possible and to be certain of paying the right price, a complete diagnosis of the company must be carried out. Indeed, the bank wants to know if the price to be paid corresponds to the real value of the company. An accounting analysis will highlight the company’s accounts, detect any problems and thus establish the real value of the company.

The buyer’s business plan

The business plan allows the buyer to assess the future financial flows and the need for working capital necessary for the continuation, or even the development of the activity. The bank will thus have a precise idea of ​​the financial will of the buyer and the way in which he intends to manage the company.

It will thus measure the risk according to the development plan envisaged by the buyer. He can thus decide to develop the activity as it is, or bring new perspectives of development with some modifications. Everything must be justified and supported in a concrete way.

In general, the buyer must have at least 30% of the total amount of the transaction in personal contribution in order to be able to claim a professional credit. It is important to make contact upstream of the project with a real estate professional and especially a broker, in order to facilitate the process.

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