The Importance of a "Financing Contingency" When Buying a Business
If you are buying a business in New York or New Jersey and expect to rely on financing from the Small Business Administration or a bank, before you sign any contract it is important that you speak with your business lawyer about adding a "financing contingency clause" to your asset purchase agreement. The "financing contingency clause", if drafted correctly, will permit you to cancel the business agreement (and get your contract deposit back) if your business loan application is denied.
The "financing contingency clause" must be specific and include, among other things, the time period you will be given to obtain a loan commitment, the maximum amount of the loan and the source of the loan, i.e., will the loan be from a financial lender or a government insured program such as those offered by the Small Business Administration. Likewise, if the transaction is conditioned upon financing from the seller, this must be specified in the purchase agreement;
To further discuss the process involved in buying a business in New York or New Jersey contact The Internicola Law Firm, P.C. at (800) 976-4904 or (718) 979-8688.
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