Buying an existing business is often faster and safer than starting from scratch — you inherit customers, cash flow and a team. A business acquisition loan makes it possible without tying up all your capital, using the target's own cash flow to help carry the debt.
How acquisitions get financed
- SBA 7(a) loans — the most common path, up to $5M with ~10% down.
- Conventional acquisition loans — for strong buyers and targets.
- Seller financing — the seller carries part of the price, often paired with an SBA loan.
- Partner buyouts — finance buying out a co-owner's stake.
Cash flow is king. Lenders underwrite the target's ability to repay the loan from its own earnings. A profitable business with clean books gets financed faster and on better terms.
What lenders look at
- The target's historical cash flow and profitability.
- Your industry experience and management plan.
- Purchase price vs. valuation, and your down payment.
Typical guidelines
| Requirement | Typical minimum |
|---|---|
| Down payment | ~10% (SBA), part can be seller-financed |
| Credit score | 660+ preferred |
| Target | Profitable with verifiable financials |
| Documents | Target financials, LOI, your résumé |
Frequently asked questions
How do I finance buying a business?
Usually an SBA 7(a) loan, sometimes combined with seller financing, underwritten on the target's cash flow.
How much down?
About 10% with SBA; part can be seller financing on standby.