What is a Business Acquisition Loan?

Got your eye on that business for sale? We can help make you the new owner with a low-rate business acquisition loan!


Business Acquisition Loan Overview

Buying a business that’s already in operation can sometimes be easier and more lucrative than starting from scratch. You can take advantage of an existing customer base and build upon the processes already in place to increase profits. Thousands of small businesses are sold every month, and since an existing business already has a track record, it's easier to get financing. FitBiz Loans offers a variety of financing options for business acquisitions.

Find Your Business Acquisition Loan!

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For Buying a Business

How a Business Acquisition Loan Works

It's easier to get a business acquisition loan than it is to get a loan to start a business from scratch. The reason for this is that the business already has a track record. Here are some of the options that may be open to you.

Seller Financing

The first resource you should turn to when buying a business is the current owner. More than half of business buy/sell transactions include seller financing, which is when the owner gives you a loan to cover part or (more rarely) all of the purchase price of a business. Owners may finance up to 60-70 % of the purchase price of a business.

Even if you’re financing the bulk of your purchase with an SBA loan or bank loan, having seller financing is important. It shows that the seller still has a role in the business and believes in its future growth potential.

SBA Loans

Loans backed by the US Small Business Administration (SBA) are another popular source of financing for business acquisitions because of their low interest rates. SBA loans are great for small and large acquisitions as you can borrow up to $5 million. In most cases, you will be expected to have the following to qualify for an SBA loan:

A credit score above 680. (Check your's here for free.)

A 20 % + down payment.

Industry or business management experience.

If you meet the above criteria, set up a free consultation with South End Capital. They can help you obtain both SBA loans and traditional loans to facilitate your business acquisition.

If you’re buying a franchise, SBA loans are an even more attractive option and may offer expedited approval.

Retirement Funds

If the seller doesn’t offer financing or you’re unable to qualify for an SBA loan, you can always turn to your own personal assets, including retirement funds. A Rollover for Business Startups (ROBS) lets you put retirement money in a business without any taxes or early withdrawal penalties.

If you have at least $50,000 set aside in a 401(k), traditional IRA, 403(b), or other eligible retirement account, and you don’t mind the risk of putting some or all of your nest egg in the business, learn more about how a ROBS works or get started with the ROBS pros at Guidant Financial.

Other Personal Assets

No seller financing, no SBA loan, and no retirement account? Explore other personal assets that could be put towards a business acquisition. For some people, this means borrowing from family and friends. For others, it’s home equity. Whatever your situation, there may be personal resources that you can tap into to acquire the business.

Will I Qualify for a Business Acquisition Loan?

Your chances of getting approved depend on which type of financing you plan to use. SBA loans are the most difficult to qualify for and require a credit score above 680 (check your's for free here), a 20 percent down payment, and direct industry experience. Business and/or personal assets will serve as collateral. Most lenders will require at least 50% of the loan be collateralized. If that sounds like you, set up a consultation with South End Capital

An owner who offers seller financing will behave much like a bank. He or she will typically require collateral and a personal guarantee and will check your credit before offering you a loan.

If you’re using retirement money, you should have at least $50K to put towards the business, and if you’re using home equity, you should have at least 20-30 % equity in your home.

When buying a business, it's essential to have a good business plan to show lenders how you plan to grow the business. Click here to learn how to create a great business plan in just a few hours.

Cost of a Business Acquisition Loan

Costs vary based on the type of financing. Here’s the range of typical interest rates:

Seller financing: 6-10 %

SBA loans: 6-9 %

ROBS: $5000 initial fee and $1500/year ongoing after that

Home equity loans and lines of credit: 3-8 %

Family and friend loans: Varies

Costs other than interest rates may also come into play. For instance, SBA loans have a guarantee fee and referral/packaging fee. Home equity lines of credit may have draw fees.

The Details:

Maximum Loan Amount

Typical Loan Term

Typical Interest Rates
3 - 10 percent

3 weeks - 3 months

Down Payment?

Needed for SBA loans and seller financing


Needed for SBA loans and seller financing

Personal Guarantee?

Needed for SBA loans and seller financing

Have a question?


small business loansBusiness acquisitions are potentially more lucrative and easier to finance than starting a business from scratch.

small business loans

There are a variety of financing options to fund business acquisitions, including low-interest rate options.


Some financing options require a down payment, collateral, and personal guarantee.

Buying a business can be a long process with lots of paperwork.

You may need to hire a broker, lawyer, and/or accountant to represent you in the purchasing process, and this can increase the cost of the acquisition.

How to Apply

Answer Simple Questions

Browse Your Loan Options


Get Funded in Record Time


Additional Resources

How Much Does it Cost to Buy a Business?

Guide to Franchise Financing

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