How much does it cost to buy a business is answered by listings with one number and by lenders with five. The five are the buyer's cash on the price, the working capital the business consumes before its own takings arrive, the closing costs the transaction generates, the interest paid over the notes' terms and the payments due in year one. This page states each with the free calculator's worked figures, so the buyer can compare a target to the money they have rather than to the price the seller wants.
Cash on the price, and the day's total
On the worked example a $450,000 business funded 80% by an SBA note and 10% by a seller note leaves $45,000 of the price for the buyer. Working capital of $40,000 and closing costs of $25,000 make the day $110,000. The first line moves with the seller's share; the other two move with the business and the deal, and neither is optional.
Interest over the terms
The SBA note of $360,000 at 10.5% over 10 years costs $4,857.66 a month, $582,919.20 over its term, so the bank's share costs $222,919.20 in interest. The seller note of $45,000 at 6% over 5 years costs $869.98 a month and $7,198.80 in interest. The program's maximum loan is $5 million; the arithmetic is the same at any size.
Year one, and whether the business pays it
The two notes take $68,731.68 in year one. Against seller's discretionary earnings of $180,000 less the buyer's own pay of $90,000, that is 131% coverage and $21,268.32 left. That last figure is the honest answer to the cost of the purchase: what it leaves you after it has paid you and paid for itself.
Questions people ask about how much does it cost to buy a business
Are closing costs the same everywhere?
No. Lender fees, legal work, valuations and state transfer taxes all vary. Enter your own quotes; $25,000 is the example, not a benchmark.
Why is interest counted separately?
Because it is the largest cost after the price and the least visible in the listing. A buyer comparing two stacks should compare their interest as well as their payments.
Does Keysvo keep the cost sheet?
Pro keeps every stack you cost beside its target and offer, for $14 a month; the sheet itself is free without an account.