How to Buy an Existing Business with No Money in South Africa

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how to buy an existing business with no money in South Africa

Purchasing an existing business offers a multitude of advantages for individuals that wish to become entrepreneurs. This includes having established infrastructure, a proven track record, an existing customer base, brand reputation, and access to supplier and distribution networks. It is therefore vitally important to know how to buy an existing business with no money in South Africa as it can provide upcoming entrepreneurs with a head start and immediate revenue generation. DTC can assist to develop conforming developments, with access to an expansive range of funders from across the country.

Upcoming entrepreneurs that wish to purchase a business with no money should firstly note that finance for buying an existing business is different from finance to start a business. Unlike a start-up, if the business already exists, it is easy to check its past financial trading history and the future orders it has secured, and this makes lenders more comfortable.  

If you are a previously disadvantaged South African citizen who wishes to buy an existing business, then government lending agencies is a viable option to raise finance.

The best finance option will depend upon the amount of finance you need, the approval terms, and the repayment terms offered by the lenders. Options such as term loans, government lending agencies, and equity finance are suited for the purchase of businesses that require a significant investment.

Term loans are a viable option to buy an existing business with no money in South Africa. Entrepreneurs borrow money from lenders and agree to pay this back with interest at a set monthly amount for a set period of time. Term loans usually carry a prime-linked interest rate, are paid back in equal monthly installments, and are commonly paid back over 60 months but, can vary between 12 months and 10 years. The lender may also request that you provide collateral against the loan.

The South African government thereby aims to assist previously disadvantaged individuals with the funding required to purchase business. The benefits of a government loan are that the interest rates tend to be lower and the repayment terms are flexible.

The government has also created government lending agencies such as the Industrial Development Corporation (IDC), the Development Bank of South Africa (DBSA), the National Empowerment Fund (NEF), and the Small Enterprise Funding Agency (sefa) to assist with business financing. Each of these agencies have a clear brief to assist small businesses and specifically, previously disadvantaged business owners, to access different types of finance according to their specific mandates. To see if you meet the qualifying criteria for these lending agencies get in touch with DTC for more information.

Contact DTC for professional assistance on how to buy an existing business with no money in South Africa.