Editor's choice: OnDeck business lines of credit
- Business loan amounts up to $250k
- Repayment terms up to 18 months
- $100k in annual revenue required
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Financing the acquisition of an accounting practice can allow partners of existing firms to expand their business by purchasing other firms, or it can be a way for individuals to branch out on their own as an independent tax agent.
However, getting that financing can be difficult. Many lenders will only consider borrowers who have three or more years of experience as a partner of a firm or high-level CPA of a similarly-sized accounting firm.
You don’t want a deal to slip through your fingers because you don’t have the right funding available at the time of sale. Learn about your most common loan structures and compare some of your options below.
Lenders take the following points into account to determine if they’ll extend a loan:
This is a brief list, and you should note that lenders will look at every part of the loan before making a final decision. Your experience and financial situation plays a role, along with the state of the practice you’re looking to buy. You may need to provide liquid assets for a down payment, or to show the lender that you’re serious and capable of taking on a new business.
Just because you’ve found a good deal doesn’t mean you’ve found the perfect practice for you. There are a variety of points to consider when deciding if you should buy an existing accounting practice.
Every lender is different, but these are a few points that may set one lender above another when you’re looking to finance the purchase of an existing practice.
Although it might be exciting to expand your business or finally have the opportunity to strike out on your own, it’s not a good idea to apply for a bigger loan amount than you can afford.
It can be easy to get ahead of yourself, especially when the possibilities seem endless, but keeping a handle on the fees and charges applied to your loans is vital. Overextending your finances will only lead to trouble in the future — for your business and your personal finances.
Buying out another CPA firm or expanding your accounting business may be a new process, but it doesn’t have to overwhelm you. Once you’ve secured your loan and found the right practice, seal the deal and expand your client list by learning how to further expand your business financing options.
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