Why Owner Financing is Changing the Climate When Selling Your Atlanta Bar

Learn how to safely transfer business assets when offering owner financing to sell your Atlanta bar.

Selling your Atlanta bar for cash is the best way to transfer your business assets to the buyer and there is very little risk associated with the transaction. In fact, most of the risk is shifted to the buyer who pays cash up front when the note is signed. Selling your Atlanta bar for cash is ideal however, in today’s economy you may find yourself offering owner financing. If you choose to work with owner financing there are some precautions that you should take to protect yourself and your business assets.

Last year the lending market collapsed due to the poor economy which coerced real estate buyers and investors to seek an alternative for financing property purchases. Lending markets have grown squeamish about bar financing since this type of property is valued mostly for the revenue it produces instead of the business assets such as inventory and equipment. As a result, buyers and sellers of Atlanta bars are turning to owner financing as an alternative to the aggravation of trying to secure financing from a conventional lender. If you are a seller of an Atlanta bar you may find yourself in an owner financing deal if you want to sell your business. Before you jump in with both feet and offer a buyer the option of owner financing here are a few things to be aware of:

Number One – Never finance more than you can afford to lose if the buyer defaults on the note. It may seem like this is not worth mentioning however there are many Atlanta bar sellers that will inflate their financial information so they can create a better lifestyle for themselves. If the buyer defaults on the payments the seller can end up in extreme financial difficulty.

Number Two – Hire an attorney to work out the details that will ensure you are protected in the event of payment default. Successful owner financing requires working out all of the details including the procedure that will be followed in the event of default. This includes details of the repossession spelled out in detail and completely defined so both parties understand and agree to the terms. In addition to these details, your attorney should work out the legal details for placing a lien on the equipment so that you are assured that your assets are protected if the buyer fails to meet the payments according to the terms of the note.

There are a variety of methods you can use to provide security and protection if the buyer fails to make the payments on the note. The note can contain terms that allow you to place a lien on your business equipment to ensure that the buyer does not dispose of it during the terms of the agreement. Additionally, it is a good idea to seek a personal guarantee from the buyer. Lastly, you should seek some type of security from the owner’s assets such as a home, brokerage account, rental property or anything else that provides you with value and security if the buyer defaults on the note. Collecting on the secured property can be tedious and costly so you should seek a qualified buyer from the beginning that has the experience and expertise to keep the business running at a profit.

Number Three – Do a background check on the buyer before offering owner financing. This includes pulling a credit report, seeking professional references, requesting a resume, and any other data that will verify the credibility of the buyer. Remember that it is worth it to do your homework in the beginning to avoid hassles and headaches at a later date.

Lastly, when you offer owner financing picture the worst case scenario that you can possibly think of that can happen with the new owner of your bar. Estimate how much it will cost you if you have repair and remodel your bar to open it for business in the event you have to repossess your property. Once you have your estimate make sure the down payment is enough to cover the costs if you have to take back your bar.

If you keep these items in mind when using owner financing to sell your Atlanta bar you will be assured piece of mind as well as a secure sale that is headache-free.

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