Update on Business Sales in Florida

We have entered the last quarter of 2020, and what a crazy year it has been. We wanted to give everyone an update on the state of the market in Florida business sales, since it’s been several months since we shared what’s been happening in our world. Just like real estate is absolutely booming in FL right now, business sales are and have been soaring for us throughout the past 6 months, and it doesn’t show any signs of slowing down into 2021. 

 

We Have Buyers In Abundance 

From February 2020 to September 2020, buyer inquiries on our listings have been up by over 40%. That is a HUGE increase in buyer traffic. We’ve seen much more serious buyers inquiring as well, which is resulting in many offers and eventually closings. There couldn’t be a better time for a business to be on the market than right now, because that business listing will have more buyer exposure than ever before. 

Business buyers need to understand that there is tough competition for good business listings, and they need to not only act quickly if they are interested in a business that is for sale, but they need to come in with a strong offer. It is absolutely a seller’s market at the moment. Buyers looking for a “deal” will certainly find them, as there are currently some distressed businesses on the market, but the strong businesses for sale are selling at market value, not at a deep “COVID discount.” 

In Florida, we are seeing a surge in population growth in recent months, with people from the north, mid-west, and even west coast selling up and starting new lives in Florida. Due to the current state of the world, more people are retiring earlier, changing their job situation, taking the opportunity to become entrepreneurs, or working remotely, which is all driving them out of big cities, where they felt trapped during lockdowns, and into the Sunshine State. Here they can get more for their money, maybe even a house with a pool, in a neighborhood where they can enjoy the outdoors year-round. Plus, there are no state income taxes, so it makes it even more appealing to live in Florida during our current economic situation, where every dollar in our pocket is a benefit. Real estate sales are through the roof throughout the state, and that is a great indicator that our small businesses in Florida will benefit from all of the population growth.  

 

We Don’t Have Enough Business Listings To Sell

As it often happens in business, because we have much more demand than normal, we have a supply issue. The good business listings that are priced correctly are literally flying off the shelf at the moment, and we are left with the situation of having much more buyer interest than there are listings available on the market. To put it simply, we really need more listings to sell, because the buyer demand is strong. Because our inventory is low, as mentioned above, buyers need to be aware that they could see themselves in a competitive situation, which is not something we normally see in business sales. 

We know a lot of business owners who are thinking about selling but seem to have the mentality that it might be best to wait to see how the dust settles after we recover from all of this COVID-19 uncertainty. The truth is, COVID-19 is likely to be with us for a while (some experts are estimating a few years), and we are challenged with how we can best “work around it” and find our “new normal.” Many businesses have adapted, and it’s been truly inspiring to see the creativity and innovation happening out there.

Despite our struggles with the state of the world, the business sales market has not slowed down, and in fact, it has gone full speed ahead. The market is HOT and the demand is there, so we need to get more inventory for these buyers to take a look at. For business owners who are thinking of selling, the time is right to strike while the iron is hot and get their business in front of the record number of buyers out there currently shopping. We’ve never ever heard a seller say, “I should have waited longer to sell my business.” Time and time again we hear, “I wish I would have done this earlier.”

 

SBA Lending Is Happening, But Slowly and With High Standards

One of the biggest challenges for business brokers right now is the ability of buyers to utilize SBA lending to fund their business purchase acquisitions. SBA loans are being processed, so that’s the good news. However, rightfully so, SBA lenders are much stricter about which business acquisitions they are lending on at this time, so businesses need to have clean books with as little as possible add-backs, and they need to show a healthy cash-flow, especially over the past 8 months. Any business that has been closed for months at a time or has been seriously affected by the pandemic, there is very little chance that it will qualify for an SBA-backed loan. The buyers also need to be more highly qualified than ever (i.e. good credit, experience in business ownership and in the industry they are buying into), so getting that perfect combination for a loan to be approved has been a challenge over the past several months. 

Even when we find that perfect storm of a healthy business and a well-qualified buyer, the timeframe for SBA lending at the moment is months behind their normal lending times. Usually it takes 2-3 months to close on a business where an SBA loan is being utilized, but because the SBA is so backed up right now with PPP lending and the surge in new SBA loans for business acquisitions, we are seeing closings being delayed for about 1-3 additional months. The actual lenders are approving the loans and doing everything they can do on their end, but then the applications are getting stalled out when it comes to getting approval from the SBA. Hopefully, they will start getting the backlog of loans approved, so we can start closing quicker, but at the moment, we are dealing with much longer than normal closing times. 

 

Sellers Who Offer Owner Financing Have A Better Chance Of Selling 

It is always an advantage for a seller to offer owner financing to a buyer, but it couldn’t be more advantageous than it is right now. Because the SBA is being so strict about which businesses they are lending on and which buyers they are approving, if a seller is willing to carry a note on their business, not only will they be able to close within 30 days or so, they increase their chances of selling their business by over 50%. Buyers look for business listings who are offering seller financing, and if a seller isn’t willing to entertain it, then they have to understand that they are limiting their buyer pool and even their chance of selling. 

Seller financing can be quite beneficial to both buyer and seller, so to learn more about how seller financing works, check out our blog dedicated to the benefits of seller financing HERE.  

 

U.S. Visa Applications Are Being Processed Again

Many of our business buyers in Florida are E2 Visa buyers, looking to buy a business to get a Visa, so that they can come to live and work in the United States. Until recently, Visa applications were on hold, since US Embassies throughout the world were closed due to the lockdown. As COVID cases have slowed in most countries around the globe, the US Embassies have opened and begun processing applications again, which is fantastic news. The issue that was plugging up the process was the live in-person interview element of the Visa application process, and now that they have figured out how to safely re-open, E2 Visa buyers are back, making offers, and submitting their Visa applications. Once their application is approved, then they will be able to close on the business and move to Florida. 

Sellers that choose to work with an E2 Visa buyer at this time need to be patient and flexible, and understand that the time it takes to get the Visa approved is completely out of the buyer’s hands, and it is simply a waiting game once the application has been submitted to USCIS. Nobody really knows how long the process is going to take at this point, because the Embassies are so backed up after months and months of received applications that are waiting to be processed. Visa experts and attorneys that we have spoken to recently have estimated that it could take 6 months or more for a Visa application to get approved, when normally it can take around 45-90 days. So, just like SBA lending, E2 Visas are being processed, it’s just taking a lot longer than normal. 

 

If You Are Thinking of Selling, Now Is The Time

Every business is different, and if we don’t think it’s in your best interest to sell right now, we will share our honest opinion, but for most businesses, if you want to sell, it really could not be a better time to get it on the market. Buyer interest and action is at an all-time high, and there aren’t enough good choices on the market for them. So, if you think that now might be the right time to consider selling, we are more than happy to speak with you about it, so you can consider your options. Of course, any conversations had between a business broker and a business owner are always 100% confidential, and we will never give you any pressure to sell or list. We want to work with sellers who want to work with us, who are motivated to sell their business, and who want to partner with us as a team to get it done. If this sounds like you, we’d love to hear from you. 

 

If You Are Thinking of Buying, We Can Help 

For business buyers, it is completely free to utilize our services as business brokers. Business broker commission is paid for by the seller, not the buyer, so you have a great benefit here. Business brokers in Florida work as transaction brokers, which means we work on behalf of the transaction, and we want a win-win outcome for both buyer and seller. So, if you are looking for a business to purchase in FL, we can help with any business on the market, as all business brokers cooperate and work together here. Instead of contacting a bunch of different listing brokers, you can work with one business broker, who knows exactly what you are looking for, and who can help you get the best deal possible. Many business brokers don’t like working with buyers, but we enjoy working with both buyers and sellers at Green & Co. so please reach out to us if you want free professional help to buy a business.