I run a small fitness training business and wish to purchase an existing training studio (including its entire rolodex of clients and equipment).
Buying an existing business can be a great way to accelerate your transition from employee to business owner - as theoretically you'll have revenue and be able to make a more seamless leap into full entrepreneurship.
Doing so without collateral creates some limitations, as it will likely mean taking debt financing off the table, with the exception of some peer-to-peer options. While those can be viable - the perception of increased risk that comes without collateral means that the interest rates will reflect that - and might be prohibitively expensive. If you do decide to take the leap with a higher interest peer-to-peer loan, closely examine things like pre-payment penalties or restrictions.
Crowdfunding can be an option - but unless you've got a strong support network that you think will back your play - its an uphill battle. Crowdfunding investors tend to look for scalable high growth opportunities - rather than cashflowing IRR type investments (like yours represents).
Often, the best option in these cases is to look for full or partial owner financing. They know the business - they know what it will support - and they'll be good at assessing your ability to be successful with it. Said differently - if they aren't willing to support your purchase of the business financially - it might be a signal that all is not well behind the scenes.
I'd be happy to discuss the decision of buy vs. build - it is one I've stared down countless times in my career as an entrepreneur - and I've taken both roads.
I am commercial lender with 25 years experience in the real estate and financial arena. I have financed business acquisitions without collateral. Given you have experience in the industry of the business you are trying to acquire, I would recommend a SBA 7a loan. I would also recommend you go thru a lender that is approved as a SBA Preferred Lender because they will typically add their requirements on top of the base SBA loan criteria. The SBA 7A will finance non-real estate business acquisitions such as franchises or business like this one where you are purchasing an established book of business. I financed the purchase of a manufacturing representative firm. The only assets the company owned over $1,000 was a laser printer. Through a combination of seller financing and a SBA 7a loan, we facilitated a $4M purchase with a $250K down payment from my borrower. Book a call with me if you need more info or want to explore other options.
