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RURAL MUNICIPALITY OF MACDONALD · E-2 FIELD GUIDE

Can the full purchase price be counted without reviewing financing?

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THE DIRECT ANSWER

No. Qualifying invested capital requires an assessment of actual funds, commitment and security.

Separate the seller price from the capital analysis

A loan secured by enterprise assets does not become qualifying capital because it pays the seller. Identify the actual collateral and transactions rather than using the headline price as the answer.

Break the budget into committed acquisition costs, equipment, working capital, refundable amounts, secured borrowing, government charges, and professional fees. Costs incurred to prepare an immigration application are ordinarily not the same as capital committed to the enterprise, while genuine business legal and translation expenses may be viewed differently. Where the buyers pay the full purchase price for the going concern, including equipment, inventory, vehicle fleet and goodwill, the investment is close to the total cost and comfortably substantial. Ask any adviser for an itemized scope covering valuation review, transfer documentation, the enterprise plan and dependent assistance, and ask what happens if a review finds the committed capital too thin. Costs beyond the investment itself deserve their own line: valuation, legal work on the purchase, accounting review of the seller's figures, and the filing charges applicable to the route chosen.