With the collapse and freezing of world credit markets, even the largest corporations are having difficulty getting credit, maintaining existing lines of credit and finding alternative ways of financing new projects.

For those looking to become entrepreneurs by buying a business, the problems are even more troublesome. Many deals simply aren't getting done because lines of credit are "frozen" or simply don't exist.

As a result, many would-be entrepreneurs are turning to vendor financing to complete deals and pave the way to pursue their entrepreneurial goals.

"Current credit conditions have created an environment that forces people to look at business in new ways," ActionCOACH Marketing Director Jodie Shaw said. "Vendor financing is one way for someone looking to buy a business and for someone looking to sell a business to reach a deal that works for both parties."

ActionCOACH, the world's number one business coaching firm, works with its clients to explore opportunities where a buyer and seller can complete an agreement based on vendor financing arrangements.

What exactly is vendor financing in the context of a buying a business?

"Essentially, a buyer works with the seller to pay the buyer's asking price out of the proceeds of the current business operation," Shaw said. "For example, if business revenue is $20,000 per month, the new owner can pay a portion of the asking price, say $5,000, out of the monthly revenue stream."

While the vendor financing option can be appealing for both buyers and sellers, Shaw warns there are many issues to consider in actually structuring a deal.

"First, any deal should never be 100% vendor financed," she said. "The seller also needs to vet the buyer - even if the buyer is an employee or vendor - because in some cases the new owner can't run the business as well as the old owner, and the old owner may end up with the business back in his or her hands in worse shape than before."

Shaw also said a good attorney is a necessity in structuring any vendor financed sales agreement.

"There should always be a contingency that if the new owner doesn't work out, the business reverts to the original owner, with the understanding from the seller's point of view that it may not be the same business," she said. "While vendor financing isn't a perfect alternative, it is a viable and important option for buyers and sellers in lieu of current market conditions."

As the credit markets ease, more conventional financing options will again be available for buyers and sellers. However, vendor financing should always be a strategic "Plan B" for would-be entrepreneurs.

"Vendor financing is just one strategy business buyers and sellers can use to reach a deal in a creative way," Shaw said. "Conventional credit will soon be easier to obtain - however, vendor financing is a unique option that buyers and sellers can use successfully regardless of the overall economic conditions."