Passing the Torch

As a business owner, you've dedicated countless hours and immense effort into building your company. Now, as you consider retirement, you might be thinking about selling your business to a family member. This can be a fantastic way to preserve your legacy and ensure the business remains in the family. One of the best methods to facilitate this transition is by using an SBA (Small Business Administration) loan through First Bank of the Lake.

Here’s why this option might be perfect for your family:

1. Affordable Down Payments: One of the significant advantages of SBA loans is that they often require lower down payments compared to traditional loans. This makes it much more affordable for a family member to buy your business without needing a large down payment upfront. Lower down payments mean family members can keep more cash available for other important business needs.
2. Flexible Repayment Terms: SBA loans offer longer repayment terms than most conventional loans. This means your family members will have more time to pay back the loan, which helps lower the monthly payments. Lower monthly payments can reduce financial pressure and make it easier to manage the business’s finances effectively.
3. Expert Support and Guidance: First Bank of the Lake has a team of experienced professionals who specialize in SBA loans. They can guide you and your family through every step of the process, from application to finalizing the loan. This expert support can make the entire process less stressful and ensure that all necessary details are handled correctly.
4. Preserving Your Legacy: Using SBA financing to transfer your business to a family member helps keep your legacy alive. Your family can take over the reins with confidence, knowing they have the financial backing and support needed to succeed. This continuity ensures that the values and vision you established continue to guide the business.
5. Business Continuity and Growth: By securing an SBA loan, your family member can also invest in the growth and improvement of the business. Whether it’s upgrading equipment, expanding operations, or enhancing marketing efforts, the financial stability provided by SBA loans can help drive future growth.

How Does It Work?

1. Assess the Business Value: The first step is to determine the value of your business. This involves getting an accurate valuation of the business and assets, to understand how much the business is worth. Knowing the value is crucial for setting a selling price and for the loan application process. Having an accurate valuation before moving forward with any acquisition will help set reasonable expectations if the value is different than anticipated.
2. Apply for an SBA Loan: Your family member will then apply for an SBA loan through an SBA Lender, like First Bank of the Lake. The bank will review the application, which includes evaluating the business’s financial health and your family member’s creditworthiness. They will work with your family to customize the loan to fit their specific needs. The buyer may also need to set up legal entities such as a holding company and/or seek licensing in your state. It’s wise to engage a lawyer to help craft the legal paperwork that is required in a business acquisition.
3. Finalize the Sale: Once the loan is approved, you can proceed to finalize the sale of the business to your family member. The SBA loan funds will be used to cover the purchase price, allowing you to retire with peace of mind, knowing your business is in capable hands.
4. Transition Period: It's essential to plan for a transition period where you can mentor your family members. Sharing your knowledge, experience, and insights will help them understand the intricacies of running the business. This period can ensure a smooth handover and better prepare them for their new role as a small business owner.
5. Future Planning and Growth: With the business transferred and the SBA loan in place, encourage your family members to look at ways to grow and improve the business. The financial stability from the SBA loan can provide opportunities for expansion, innovation, and increased profitability.

First Bank of the Lake prides itself on providing personalized service tailored to your family’s unique situation. Our team will take the time to understand your needs and offer solutions that work best for you. With extensive experience in handling SBA loans, First Bank of the Lake can navigate the complexities of the loan process efficiently. Our expertise ensures that the loan is structured to benefit you, your family, and the long-term success of your business. As a community-focused bank, First Bank of the Lake is committed to supporting local businesses and families nationwide. We understand the importance of keeping businesses within the community and are dedicated to helping small business owners achieve their financial goals.

By choosing SBA financing and First Bank of the Lake, you’re not just selling your business; you’re investing in its future. Through thoughtful planning your hard work and dedication will continue to prosper, providing stability and opportunities for your family for years to come. Selling your business to a family member with the right financial tools and support can lead to a successful and rewarding transition, securing your legacy and the ongoing success of the family business.