Business Acquisition Financing

Best uses

• Buying an established business
• Franchise purchases and resales
• Partner buyouts
• Competitor roll-ups
• Management buyouts

Typical borrower profile

• Buyers with relevant industry or management experience
• Operators acquiring a business with documented cash flow
• Existing owners consolidating ownership

Potential qualification factors

Every lender sets its own criteria, and no factor guarantees or blocks approval on its own. Commonly reviewed items include:

• Target business cash flow and financials
• Buyer experience and credit
• Down payment or equity injection
• Deal structure and purchase price support
• Seller transition plan

Documentation to have ready

• Government-issued ID
• 3 to 6 months of business bank statements
• Basic business information (entity, EIN, time in business)
• Voided business check for funding
• Business and personal tax returns
• Profit and loss statement and balance sheet
• Business debt schedule
• Target business tax returns and financials
• Letter of intent or purchase agreement
• Buyer resume and personal financial statement

Benefits

• SBA 7(a) and conventional structures available
• Seller financing can combine with lender financing
• Terms sized to the cash flow of the acquired business

Common challenges to plan for

• Thorough underwriting of both buyer and target
• Equity injection is typically required
• Deals can fall apart over valuation gaps

Frequently asked questions