How to Get a Business Acquisition Loan

Last updated May 27, 2025

If you’ve found your way to this page, that means you’re planning to purchase an existing business or franchise, or increase the stake you currently own in your business. That’s a solid position to be in—well done! Of course, you’ll need some help in the form of a

small business loan

to reach that next level for your business. We’re here to walk you through the steps for getting a loan to buy a business:

Step 1: Evaluate your qualifications and understand what lenders are looking for.
Step 2: Choose the best business acquisition loan for your needs.
Step 3: Complete the application process.

And when you’re ready to search for a business acquisition loan, we can help match you with the loans best suited to your business needs and qualifications.

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Your credit score won't be impacted

Compare multiple lenders with one application

Step 1: Evaluate your qualifications and understand what lenders are looking for.

Lenders are offering a large amount of money for a big business endeavor, so they’ll spend significant time evaluating your business, your personal management experience, the details of the business you’re buying, and so on.

Here’s a look at the different

business loan requirements

lenders will be taking into consideration when you apply for financing to buy a business.

Personal Credit Score

Lenders see your personal credit score as a significant factor in your likelihood of making your loan repayments after taking on business acquisition funding.

From the lender’s point of view, they’re lending money to a small business owner, not just the business itself. So how you handle your personal finances is incredibly significant.

If your credit score is 690 or above, you’re in great shape and will likely have excellent loan options available to meet your business acquisition needs.

Business Credit Score

If you already own a business, lenders will also review your

business credit score

, which is determined through six main factors:

Payment history
Business age and size
Amounts owed
Length of credit history
Various credit accounts on your report
Risk associated with your industry

Cash Flow and Down Payment

The cash flow of your existing business acts as a snapshot of its financial health and an indication of whether your existing business can support the debt and uncertainty of a business acquisition.

If you have positive cash flow, that’s a sign that you’re managing your business finances well. Plus, a strong profit margin gives you the necessary buffer to make payments on your acquisition loan—even if your newly acquired business isn’t immediately profitable.

Getting a small business loan to buy a business also may require a down payment. This could be a one-time payment of anywhere between 10% to 30% of the loan amount.

When looking at your cash flow, a lender offering a business purchase loan will want to see that you have enough liquid cash to make a significant down payment and still have enough cash on hand to make your loan payments each month.

Collateral

The business you’re purchasing can sometimes serve as collateral. But some lenders may require that you put up another form of personal or business collateral, beyond the assets included in the new business you’re purchasing.

The more collateral you’re willing and able to offer, the easier time you’re likely to have getting a business acquisition loan.

Business Plan

Along with other pieces of your

business loan application

, you’ll want to submit a detailed business plan for your new business explaining the history of your current business, plans you have to make changes or add value in the future, and a plan for transitioning to your new strategy.

With this business plan, you’ll want to be sure to include future financial projections. These should be well researched and backed by verifiable data.

Experience

In addition to your business financials and plan, the lender will consider how your work experience as a business owner will contribute to the future of the business post-acquisition. If you have relatively little experience running a business, that could be seen as a red flag to the lender.

Step 2: Choose the best business acquisition loan for your needs.

Next, you’ll want to determine which

type of small business loan

is best for your needs.

Loan Type	Best for:
Bank term loans	Highly qualified borrowers looking for lowest interest rates and longest terms
SBA loans	Strong borrowers who can’t qualify for traditional bank loans
Online term loans	Borrowers who can’t qualify for bank or SBA loans; those who need faster funding; startups looking for a loan to buy a business
Seller financing	Affordable, flexible financing option for businesses struggling to get other types of acquisition loans
Equipment financing	Borrowers purchasing businesses with valuable equipment; faster funding with more flexible requirements than other options

Bank Term Loans

If you’re looking for business acquisition loans with a fixed interest rate and predictable monthly payments, a traditional

business term loan

from a bank will fit you well. It’s the easiest to understand because it’s probably what you naturally think of when you think of a business loan.

With a term loan, you borrow a fixed amount of money, usually for a specifically stated business purpose, and pay back the loan over a fixed term and typically at a fixed interest rate.

However, bank lenders have high standards, and you may not qualify on your first try (or at all)—so prepare for one or several lengthy loan applications to secure a bank term loan for your business acquisition.

SBA Loans

If you don’t qualify for a bank term loan,

SBA loans

are your next best option for low interest rates and long terms.

These business acquisition loans are slightly easier to qualify for than bank loans since SBA loans are partially guaranteed by the government, making it a little less risky for lenders to fund small businesses.

SBA 7(a) loans

are the most common SBA financing option, and the Small Business Administration specifies business acquisition as one of the acceptable uses for the loan.

SBA loans offer long terms (up to 25 years), low interest rates (currently between 10.5% and 15.5%), and large loan amounts (up to $5 million). You’ll still need to meet top requirements to get approved for an SBA loan, including proving that you’ve been unsuccessful in getting funding elsewhere. Plus, like bank loans, SBA loans are notoriously slow to fund—taking anywhere from a few weeks to a month or more.

SBA Express loans

can offer faster approval and funding timelines, but they max out at $500,000.

Online Term Loans

If you need faster funding, can’t qualify for a bank or SBA loan, or you’re a new entrepreneur looking to buy an existing business, online term loans may be the best option for you. They’re typically easier to qualify for than bank or SBA loans and faster to fund.

Online term loans typically have terms of four months to seven years, with loan amounts up to $10 million. Although the interest rates with these are often higher than with a bank or SBA loan (ranging from 6% to 99%), you can still find reasonable rates, especially if you have strong qualifications.

If you’re a startup looking for a loan to buy a business, your choices will be more limited; however, you may find luck with lenders like Fora Financial, National Funding, or QuickBridge. All of these lenders require a minimum of only six months in business, although you’ll have to meet a high threshold for minimum annual revenue (at least $240,000), and your loan will almost certainly come with higher interest rates and shorter terms.

Seller Financing

Seller financing

works as it sounds: instead of getting financing from a bank or another third-party lender, you’re getting a loan from the seller of the business itself.

This form of financing financing is a great option if you can’t qualify for other types of business acquisition loans, especially since rates and terms are typically competitive with other financing products. Of course, for this type of funding to be a viable option, the owner of the business you’re purchasing must be willing and able to offer it.

Equipment Financing

If the majority of the purchase price for the business you’re acquiring is based on the value of the equipment being transferred, an equipment loan could be a smart source of financing for your business acquisition. A small business equipment loan can be used for virtually any equipment need—from machinery and heavy equipment to hardware and software.

Using

equipment financing

as a business acquisition loan can be great for accessing funding quickly and with fewer application requirements. With this type of funding, the equipment you’re financing serves as collateral to secure the loan, so many lenders can offer more flexibility in their qualification requirements.

In this way, equipment financing is often worthwhile for newer businesses, as well as those with average credit.

Step 3: Complete the application process.

Once you’ve determined the right product and lender for your business acquisition loan, gather all of the materials necessary for your application. In general, you can expect to provide some, if not all, of the following:

Basic information about your business, as well as the business you’re looking to purchase
Personal and business bank statements
Personal and business tax returns
Financial statements and business debt schedule
Business plan and relevant experience documents
Business valuation information
Collateral or down payment information
Business licenses, ownership documents, legal contracts or documents
Business sale contract or letter of intent

Once you’ve gathered all of the required documentation, you can complete and submit your application.

Underwriting and Closing for Business Acquisition Loans

As you go through the underwriting process, ensure that you respond to the lender’s request for more information or clarifications promptly and accurately—this will increase your chances for approval, as well as speed up the loan timeline.

Before you accept any offer, be sure to review the business loan agreement thoroughly, ask any questions you have, and even review it with a business advisor or attorney. If you have multiple offers, compare them to find the most affordable option for your business.

Once you’ve decided which loan is best for your needs, sign the loan agreement and proceed with the closing process. Depending on the lender and product, you may receive the funds in your bank account anywhere from a few days to several weeks after closing.

Fundera Can Help

We created Fundera to make the process of finding a small business loan as simple as possible. With our free online marketplace, you can easily compare your options and figure out which business acquisition loan is right for you.

You’ll be matched with one of our business loan experts who will help walk you through the process and find the best financing options for your business.

Let’s get you funded!