Frequently Asked Questions

19. There is substantial "goodwill" in the purchase price of the business. Will that affect my ability to obtain a loan for the project?

It is often challenging to obtain financing for large amounts of business goodwill. Typically, lenders don't like to finance goodwill because it does not represent tangible assets and can't be used as collateral. If a project contains significant business goodwill, the lender may expect the borrower to contribute a higher percentage of cash to the deal to help finance the project, and/or the lender may request additional collateral. In some instances, the seller may be willing to finance the goodwill portion of the project.

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The Arkansas Small Business Development Center is funded in part through a cooperative agreement with the U.S. Small Business Administration through a partnership with the University of Arkansas at Little Rock College of Business and other institutions of higher education. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA. It is the goal of UALR to eliminate discriminatory harassment and to promote equal opportunity regardless of race, gender, color, national origin, sexual orientation, age, religion, veteran’s status, or disability.