Problem Solving Financing – What are my options? APS Holmes Group is here to help!


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So, you have decided to purchase a practice. Whether for an acquisition to your existing firm or you are an individual looking to purchase an already established practice for yourself; The process of purchasing can seem daunting. APS is here to guide you through this process, and as a buyer, our expertise and experience is a free service at your disposal.

As you start this journey it is important to recognize the way that purchasing a practice does not happen. The buyer does not have to take the full purchase price out of savings and write a check to the seller. There are many options for financing the perfect addition to your career, and below is an overview of how APS is here to offer you solutions.

Down Payment: The first step in successfully purchasing a firm is the buyer comes into this equation with a substantial down payment. That amount varies, of course, but owners often consider 20%-50% to be adequate. It should be remembered that the down payment is not the only cash that the buyer will be investing into the business but will also need working capital to get the new business going and to pay bills until the receivables get up to a normal level and start to turn. In contrast, sellers should not be shocked with the reality of a buyer managing only twenty percent down.

The down payment accomplishes two important goals. First, it shifts a very significant amount of the risk to the buyer, and the second item checked off that is accomplished by the down payment is that it gets the buyer committed to the purchase. Buyers will go to great lengths to avoid losing this very substantial investment.

SBA Financing: While many buyers do not normally have enough cash to pay sellers all cash at closing, it is still possible in many cases for sellers to get substantially all cash for their practices. The primary source of this cash is through SBA financing. Normally conventional financing is very difficult due to banks insistence on collateral lending. SBA, on the other hand, is willing to loan based primarily on the historical cash flow of the business, the buyer’s credit history, and the buyer’s experience. In addition to the increased ease of an SBA, interest rates on an SBA loan are reasonable (while variable), and a ten-year term allows for low payments. An SBA loan is an effective and more realistic way for a buyer to purchase a practice, but it should be noted for transparency the minute downside of SBA financing is the bureaucratic process of application and approval, the upfront fees, and it can be harder to qualify.

Seller Financing: Is a common request from buyers and from our years of experience, half or more of the practices do not have that much cash flow to be opposed to this option. As a seller it is imperative to not blame the buyer for this. If your practice is bigger than minimal size and if your net cash flow is somewhere near fifty percent of gross revenues, then it probably will qualify. If historical cash flow is significantly less than fifty percent of cash flow, you need to face the fact that the profitability of your practice is not up to ideal and that your practice may not qualify for SBA financing, which would in turn rule out good buyers interested in your firm. Besides the fact that seller financing might be the only practical way to get a practice sold, seller financing also carries a couple of benefits. Besides these advantages, a seller financed transaction avoids a great deal of time-consuming SBA process and allows deals to get done that otherwise would be impossible.

Whether you are wanting to sell your firm or are looking to purchase a practice; It is imperative to keep an open mind on your options for financing. Many deals do not have just one option but are a combination of methods that are as diverse as the firms we service across the country. APS Holmes Group is here to guide you as a buyer through this process to help you arrange financing a deal that works in both you and our seller’s best interest. With our years of experience and many connections, we can make this journey as effortless as possible. In fact, many of our established buyers are so happy with their experience, they have ended up using our services to sell their firm when they retire.

Contact the APS Holmes Group team:
Call Us at:Toll-Free: 800-397-0249 or Email :

Source: Accounting Practice Sales

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