Lease Time Bomb

Are you ready to lose thousands of dollars on a small business acquisition, thanks to a ticking time bomb called a lease?

Imagine this real-time scenario as it happens more than you would think.

You've spotted a gem—an HVAC services company established in 1983 with a healthy cash flow and a prime location.

What could go wrong?

The listing broker might paint a rosy picture, assuring you that the lease expenses won't change.

But always remember—trust, but always verify.

Here's what the business buyer and I unearthed when we dug deeper:

-A prime location (Great!)

-Old lease rates (Even better!)

-Lease ending soon (Alarm bells!)

Rent hikes in today's market can make or break your deal. Know before you buy!

Your cash flow profits are on a sinking ship when the landlord serves you a hefty menu of current market rates as the new owner/tenant.

In this case, the landlord doubled the rent, consequently torpedoing the business's cash flow.

The result?

The buyer's SBA loan approval was hanging by a thread.

I've seen sellers and buyers sleepwalk right into a disaster. They poke the landlord for new lease terms at the last minute, unprepared for the shock of escalated rates.

Think about it.

The current owner signed their lease years ago, securing an affordable, low-rent expense. But remember, time waits for no one.

Market rates today are significantly higher.

The surprising sting of double rent can shatter your small business debt service coverage and send your loan approval to the trash bin.

Don't be that business buyer shocked at the final hour.

Confirm the new lease terms and expenses before signing that dotted line.

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Deb Curtis is a dedicated ally for business buyers, prequalifying and sourcing the best SBA-backed loan projects. With an extensive background as an SBA lender previously employed by various banks and non-bank lenders, she saw the need for a positive change in Main Street business acquisition lending to protect buyers.

Frustrated by banks' credit policies and politics, she founded her consulting firm in 2018. Known for her integrity, loyalty, and transparency, Deb focuses on quality over quantity in business acquisition loans, ensuring seamless ownership transitions for her clients.

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