American seeking financing to purchase a small acquisition in Canada

searcher profile

September 12, 2024

by a searcher from Millersville University of Pennsylvania in Mantua Township, NJ, USA

Hey all - I came across a business in Canada that I'd be interested in purchasing. It's relatively small doing about 300k CAD top line, we didn't discuss SDE on our first exploratory call. The seller would be staying on board and joining my company. In EOS terminology she realized she'd prefer to be an Integrator than a Visionary.

I've been able to find some information about purchasing a business if you want to move to Canada and use buying a business as a way to get permanent residency or citizenship. I'm not planning to move to Canada.

According to the seller 70% of the clients are US based anyway, and the team has a three folks in Canada (including the seller) and the rest are overseas.

Anyone know of any banks that would be willing to finance a deal like this? I've brought up the idea of doing a seller note, and I think the seller would be open to doing that for at least part of the purchase price, but I'm thinking that I'll end up needing some amount of financing on the deal.

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commentor profile
Reply by an intermediary
from Harvard University in Fredericton, NB, Canada
Retired Cdn banker here.
I don’t know of any Cdn that would finance this. She would be very unlikely to get a loan even as the owner. It’s really too small and I expect that she’s taking advantage of every write down legally allowed. Maybe even a few discretionary ones too.
Betting there’s little to no profit showing.
This will need to 💯 owner financed.
Highly recommend you have yourself covered for any surprises once you own it. Surprises such as old inventory and/or incorrect inventory count.
I just sold a very profitable $1 million business, 30+ yr history and it took a multimillionaire to co-sign the deal.
The buyer had 40% down payment.

If you have a Canadian partner with personal guarantee it could happen. Canadian banks like to support those who don’t need them 😂
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Reply by a searcher
from Brock University in London, ON, Canada
Canada does have a version of the SBA loan called CSBFP loan. I'm not sure if American's can use it but I provided a link below. Almost all major lenders participate but the Business Development Bank of Canada has the most appetite for risk. If you can't use the BDC I'd look into TD because they can sometimes reference your US credit for purchases.

Shoot my a dm if you'd like to chat further.

https://ised-isde.canada.ca/site/canada-small-business-financing-program/en
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