Business Acquisition Loan
$250,000.00
Loan
Description:
This loan supports entrepreneurs who intend to acquire a significant stake of at least 25% of the value of an existing business with the aim of executing a takeover in a maximum of 5 years. The applicant must work be involved full-time in the business and the project must be part of a strategy aimed at transferring the management and ownership of the business from the current owner to the entrepreneur.
Comments on Funding:
1. Funding is up to $250,000 and there are 3 types of financing available:
a) Term or equity loan, repayable over 5 years, or under certain conditions, up to 7 years, with the possibility of postponing principal payments for up to 12 months.
b) “Excess Cash Flow” loan, where the principal is repayable annually according to a stipulated percentage of excess cash flow, over a 10-year period.
c) Debenture maturing at between 3 to 5 years, or under certain conditions, up to 7 years, and which may be convertible and backed by share options.
2. This loan can be combined with conditionally non-repayable financing that may cover 50% of external professional fees related to the applicant’s project.
Loan terms and conditions:
1. Repayable at any time without penalty.
2. Collateral may be required for this type of financing.
3. Interest rate: Competitive and risk-based.
Continuous Intake
Eligibility:
Applicants must be seeking financing for the acquisition of a business with the intention of taking over that meet these eligibility criteria:
1. Be legally constituted;
2. Be located in the DEL region or plan to be;
3. Operate in an eligible industry: Aerospace, Agri-Food, Transport and Logistics, Information Technology, and Life Sciences, and offer value-added services or products generally intended for businesses (B2B);
4. Submit a project that involves acquiring a business with the intention of taking it over and that will help create and/or maintain jobs;
5. Own at least 25% of the business and work there full-time;
6. Have experience and training that is relevant to the project;
7. Submit a project for which government financing and DEL financing combined cover a maximum of 50% of the project expenses;
8. Demonstrate that the project is based on realistic financial forecasts demonstrating profitability and growth potential;
9. Provide current financial statements showing 20% equity after the project and ability to repay;
10. Demonstrate that the business and entrepreneur are not in default to the government or its creditors, nor are they the subject of any litigation.
Application Steps:
Applicants must book an online appointment.
Documentation Needed:
Applicants must submit:
1. Market valuation report of the business to be acquired;
2. Transfer of ownership agreement and agreement to sell at least 25% of the business;
3. Plan to transfer management and ownership with the intention to take full control of the business in a maximum of 5 years;
4. Financial statements for the past 3 years and current year;
5. Opening balance sheet;
6. Projected financial forecasts for the next 2 years;
7. Profile of the buyer, including his personal financial statement and credit report;
8. Business model and revenue model or business plan;
9. Any other document relevant to analyzing the transfer project.
Other Things to Note:
About the author
Maurice
