Going to celebrate all my new followers (thanks @ShaanVP) with a thread on why 2021 is the best time in modern history to buy a business and everyone with a pulse should consider it. It is even possible to buy with no net equity. Read on for how and why:

1. SBA six month free program. If you buy before end of Sept 2021, the SBA will make your payments for you (capped at $9000 per month). That will be approx. 5% of the value of the business purchases.

2. Many people don’t know you can buy a business with an SBA loan for only 5% down. If you negotiate upfront with the seller to have 5% of the purchase on full standby (meaning it could be up to 10 years before they get paid off) you can use that as equity.

So let’s suppose you buy a business for $1 million. You could do $50k down and $50k on full standby note. You then get your first 6 months payments ($54,000) paid by the SBA

Congratulations! You now own a business cash flowing $200k-$300k with no equity. But there’s more.... you can also ask for working capital as part of the loan. So you could have cash in the bank at close. $50-$100k would be reasonable on this deal.

3. All businesses have been stress tested by COVID. So you get the benefit of hindsight to see how your target business held up to a pandemic, a micro-depression and more. The best actually grew right through it.

4. SBA lenders will be more risk tolerant due to stimulus. The SBA Express limit is increased to $1 million. Those can be done in 7 days. For larger loans, lenders only have to take 10% of risk compared to normal 25%. Call around - every lender is different.

5. Don’t have time to manage it? No problem. The best small businesses already have a general manager who will stay. You can quickly test the talent market with Ziprecruiter while in diligence. Lots of skilled managers looking for new jobs. (Especially former retail and food/bev)

6. The economy will recover in very predictable ways given the effectiveness of the vaccines. By mid-year 2021, many businesses hit by the pandemic will be glorious. Expect every brunch spot to be overflowing for months.

7. Low interest rate environment is great for you as a small biz buyer. Expect SBA loans to be 4-6% interest, 10 year amortization.

8. Bonus (depreciation): if you do an asset purchase of a business with hard assets, you can take all of that value as a tax deduction in year one. If you have other income, your down payment could come from your tax savings. https://www.plantemoran.com/explore-our-thinking/insight/2020/10/bonus-depreciation-has-never-been-more-valuable

Forgot a big one! 9. You can pull up to $100k from your 401k. Use that as your down payment, then put it back any time in the next 3 years. https://www.cbsnews.com/news/stimulus-bill-covid-relief-penalty-free-401k-withdrawal/