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We’ve reviewed over 130 business loans — including SBA loans, term loans, lines of credit, merchant cash advances and more – to help you find the best loan for your needs. Use our table to compare lenders, and then select Learn more to visit the lender’s site or More info to read our review.
Business acquisition loans are loans used to purchase an existing business or franchise. There’s no specific type of business acquisition loan. Rather, you can finance a business acquisition with a term loan, the SBA 7(a) loan, startup loans and equipment financing.
SBA (7a) loans have the advantage of not requiring collateral like real estate or inventory, but they can take a while to approve. You may get a faster turnaround with a term loan from an online lender.
Business loans are an ideal way to fund a new business and get it off the ground. While taking on debt carries a certain level of risk, a business acquisition loan can help you expand to the next level. According to the SBA, over 61,000 loans were extended to small business owners in 2021.
Here are the six basic steps to get a business loan:
There are many different types of business loans. Rather than applying for loans everywhere, your time is better spent figuring out what type of loan best suits your needs and honing in on specific lenders whose eligibility criteria you meet.
Getting a loan with bad credit may be more challenging, but it’s not impossible – especially if your business financials are strong. If you can’t get a loan from a traditional bank or an online lender has turned you down, these bad credit business loan options may be easier to qualify for.
When you’re ready to make an investment and buy a new business, you can use one or more of these loans to finance your purchase.
Business term loans let you borrow a lump sum, fixed-rate loan that you repay over a set period – usually from three to 20 years. Term loans are available from banks, credit unions and online lenders. They’re often used to fund a business acquisition or to pay for fixed assets like real estate, facilities and equipment.
An SBA loan from the Small Business Administration (SBA) is a small business loan partially backed by the government. They’re designed to help small businesses get funding at competitive rates and higher loan amounts than a typical bank loan.
SBA loans are usually secured with collateral, although it’s not required with an SBA (7a) loan. However, there’s a minimum 10% down payment, aka “equity injection,” on SBA (7a) loans.
This arrangement lets you purchase a business directly from the seller with a loan built into the terms of the sale. Repayments are often a percentage of the business’s future profits, though terms and conditions vary depending on what you negotiate with the seller.
This option is for people with over $50,000 in a 401(k), IRA account or another retirement account. The benefit of ROBS is that you can invest a portion of your investment account funds into a new business without having to pay extra taxes or early withdrawal fees.
Venture capitalists are groups or individuals that aggressively look for big returns on investment and have a particular interest in new startups. They typically offer money in exchange for equity or a share of the company ownership.
Angel investors are a specific type of venture capitalist and are typically individuals. They also want to acquire equity but often take a more active role in the success of the company and offer money as well as advice, experience and connections.
Most small business assistance from the government comes in the form of free or inexpensive advisory and guidance services. There are also small business grants that offer funds to businesses that meet certain requirements. See how business grants compare to business loans and which might be better for you.
Crowdfunding involves setting up an online campaign to raise small amounts of money from the public. Your success here is largely down to luck and the size of your social network, but your odds improve by being skilled in marketing. Offering your supporters gifts and freebies and having a promising, well-thought-out business plan help.
The majority of small business assistance from the government comes in the form of free or inexpensive advisory and guidance services.
There are also small business grants that offer funds to businesses that meet certain requirements. Here’s information on where you can find small business grants.
Many successful enterprises got their start with loans from family and friends. However, if you choose the route, it’s best to keep everything professional by writing a formal loan agreement with interest rates and repayment terms.
If you believe in your business plan, keep loans down by using as much of your personal savings as possible. Some lenders, particularly angel investors and venture capitalists, look upon this favorably and will be more likely to invest in your business if you have a personal stake.
If you have over 20% equity in your home, you may be able to borrow against it to finance a new business. Home equity loans typically have a 10-year draw period with interest-only payments and a 20-year repayment period. But you risk losing your home if you can’t pay it back.
Lenders are interested in six key factors when considering you for a business loan.
If the business you want to purchase has been operating for less than a year, the lender will likely consider it a startup. Because startups don’t have the track record of an established business, you may not be eligible for a traditional business loan from a bank or online lender.
If you don’t qualify, you can consider these options instead:
You can also consider crowdfunding, asking friends and family for a loan or applying for a small business grant.
When securing financing for a new venture, first determine the type of loan you need and are most likely to qualify for based on your credit score and time in business. Then, compare and prequalify with different lenders – including traditional banks, credit unions or online lenders – to find the best deal for your situation. Compare the best business loans in 2023.
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Right now I have assets and I want to grow my business so I am kindly asking you if you can offer me a loan.
Hi Felix,
Thanks for getting in touch!
It’s good to know that you have assets and you’re wanting to grow your business! To know if you can be approved a loan. review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the terms and conditions and product disclosure statement and contact the bank should you need any clarifications about the policy.
Hope this was helpful. Don’t hesitate to message us back if you have more questions.
Best,
Nikki