Buying an existing business often requires more upfront capital than starting one from scratch. Business acquisition loans can help cover the purchase price and related costs, but the right choice depends on factors like your credit, experience and how quickly you need funding. Here’s a closer look at some of the top lenders to help you find the best fit.
We evaluate lenders based on the following factors:
Application process
Credit score minimums
Customer service reviews
Eligibility requirements
Extra features
Fees
Funding turnaround times
Lender reputation
Minimum and maximum loan amounts
Products offered
Rates
Willingness to work with risky industries
We also search for lenders that cater to a range of needs, including those that work with bad credit and newer business owners.
How to compare business acquisition loans
To narrow down your options and find the best fit, it helps to compare business acquisition loans using the following criteria:
Eligibility requirements. Check the lender’s eligibility requirements for the type of loan you want to apply for. Long-term business loans and SBA loans tend to have tougher eligibility requirements than working capital loans and equipment loans.
Repayment terms. Because term and SBA loans generally have the longest terms, they tend to accrue the most interest over time. However, this may be a fair tradeoff for having lower monthly payments over a longer repayment period.
APRs. APRs on long-term business loans and SBA loans are generally lower than APRs on shorter-term loans. It’s always a good idea to compare multiple quotes from different lenders to ensure you’re getting the best deal.
Origination and other fees. Depending on the lender and your credit profile, you may be charged an origination fee on your loan. Also, be aware of prepayment penalties, late fees and monthly administrative fees that may apply to your loan.
Funding times. While you may get a term loan in a week or less from an online lender or bank, some SBA loans can take weeks to fund. If you need funds right away, other options may work better, including short-term business loans.
Customer support options. Many lenders have loan officers who can answer your questions and support you throughout the application process. This can be especially important for loans that require extensive documentation.
Customer reviews. Customer reviews on sites like Trustpilot and the Better Business Bureau (BBB) website are a good place to learn how previous customers have fared with a particular lender.
What is a business acquisition loan, and how does it work?
Business acquisition loans are used to purchase or buy into an existing business. Most buyers use term loans or SBA loans, which are repaid in fixed monthly installments over a set period. Shorter term options, like lines of credit, can also be used in some cases, but they tend to be more expensive and are usually better suited for smaller purchases or working capital needs.
Repayment terms for business term loans typically range from three to 10 years, while SBA loans can extend up to 25 years. Depending on the lender and loan type, loans may be secured or unsecured, with SBA and commercial real estate loans often requiring a down payment of around 10% to 20%.
To qualify, lenders usually look for good credit along with at least two years in business and steady revenue. Many business acquisition loans also require a personal guarantee from the borrower.
Pros and cons of business acquisition loans
Business acquisition loans can make it possible to buy an existing business, but they often come with stricter requirements than other types of financing. Here’s a quick look at the pros and cons of loans to buy a business:
Pros
Repayments can be stretched out over a longer term
Rates may be lower than for short-term loans
May have certain tax advantages
Cons
Pay more interest over the long run
May be harder to qualify for than a short-term loan
Best rates go to established business owners
Funding may take longer, especially with SBA and bank loans
Compare other business acquisition loans
Want to see how the business acquisition loans on our list compare to other lenders? Then check out the table provided below.
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What is the Finder Score?
The Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
These are the most common types of loans used to purchase a new or existing business.
Type
Typical loan amounts
Typical term lengths
Best for
Term loan
$5,000 to $2 million
3 to 10 years
Long-term growth and expansion
SBA
Up to $5 million
10 to 25 years
Long-term growth and expansion
Equipment financing
Up to $5 million
1 to 5 years
Buying equipment and machinery
Commercial real estate (CRE) loan
Up to $5 million
5 to 20 years
For purchasing or developing new property
Line of credit
$1,000 to $500K
1 to 2 years
Working capital needs
How to qualify for a business acquisition loan
To qualify for a business acquisition loan, you’ll need to meet the lender’s credit score, time in business and annual revenue requirements. Also, be prepared to provide the following documents when applying for a business acquisition loan:
Sales contract
Financial statements from the business
Business plan and sales projections
Proof of funds for a down payment, if required
Personal and business tax returns
Proof of collateral, if required
How to apply for a business acquisition loan
Applying for a long-term business loan typically follows these four steps:
Check your eligibility. This step involves checking your personal and business credit scores, tallying your revenue, verifying your time in business and determining if you have any collateral to pledge if you go with a secured loan.
Gather your documentation. Required documents typically include bank statements, tax returns, financial statements and other documents. You may also need to provide a business plan and personal guarantee if you’re a newer business owner.
Complete the application. Fill out the full application and upload the required documents or link to your financial accounts. Be sure to review the application for accuracy before submitting to avoid delays in processing.
Wait for approval and funding. Depending on the type of loan you choose, you could receive approval and funding in a few days or up to several weeks. Online lenders tend to have faster processing times than banks.
How to prequalify for a long-term business loan
Prequalification involves answering a series of questions about yourself and your business to determine your eligibility before you formally apply for a loan.
Here are the general steps:
Visit the lender’s website and fill out the prequalification form.
Provide information about yourself and your business.
View your loan options and compare offers.
Once you’ve narrowed down your options based on your quotes, you can formally apply for a loan with the lender of your choice. Just keep in mind that not all lenders offer a prequalification option; you may have to complete the full application to find out if you qualify.
Where can I find a loan to buy a business?
Business acquisition loans are available from traditional lenders like banks and credit unions, online lenders and business loan marketplaces like Lendio, Lendzi and Biz2Credit. Here’s a look at the top options:
Banks and credit unions
Banks and credit unions are a good place to start a search for a business acquisition loan. These institutions tend to have the most competitive rates, especially if you’re an existing customer. To qualify, you’ll typically need a minimum credit score of around 700, two years in business and at least $100,000 in annual revenue.
Online lenders
Online lenders tend to have more relaxed eligibility requirements than banks and credit unions and may offer faster processing times on term and SBA loans. Many online lenders also offer the SBA Express loan program, which typically offers faster turnaround times and funding than the SBA 7(a) and 504 loan programs.
Alternative lenders
Besides bank and online loans, there are other options for funding a new business acquisition. These include personal loans, home equity loans, venture capital and angel investor financing, crowdfunding or asking family and friends.
Alternatives to a business acquisition loan
If you don’t qualify for a business acquisition loan because you don’t meet the lender’s revenue or time in business requirements or you’re a startup, consider these alternatives:
Personal loan. You may be able to use a personal loan for business expenses. Personal loans aren’t dependent on your time in business or revenue, which could work well if you’re buying or starting your first business.
Home equity loan or HELOC. If you have more than 20% equity in your home, you could borrow against it to secure funds for a new business venture. But if you can’t keep up with the payments, you could risk losing your home.
Credit cards. A form of self-funding, credit cards can provide the capital you need to buy an existing business or to start one from scratch — but watch out for high rates.
Investor financing. If you’re an entrepreneur, money from an angel investor can give you the cash you need to get your business off the ground. But you’ll have to give up equity in your company in return.
Crowdfunding. Crowdfunding is a popular marketing tool and a good way to gauge interest in your product or service. It can help you gain potential customers while you drum up funding for your business.
Grants. Business grants are free money through federal and state government agencies, as well as private corporations. Since they’re free, many people compete for grants, and they can take months to fund.
Frequently asked questions
The best loan for acquiring a business depends on your credit, time in business and how much you need to borrow. SBA loans are often a good fit for larger purchases and longer repayment terms, while bank or online term loans can work better for faster funding or smaller acquisitions. Comparing multiple options can help you find the loan that best matches your situation.
Yes, you can use an SBA loan to buy an existing business. SBA 7(a) and 504 loans are commonly used for business acquisitions, but they come with stricter credit, documentation and down payment requirements than many non-SBA options.
The monthly payment on a $50,000 business loan depends on the interest rate and repayment term. For example, a five-year loan at around 8% interest would have a monthly payment of roughly $1,000, while a longer term or lower rate would reduce the payment.
The easiest business loans to get approved for are usually short-term loans or lines of credit from online lenders. These options often have lower credit and revenue requirements than bank or SBA loans, but they typically come with higher rates and shorter repayment terms.
To get approved for a $500,000 business loan, lenders usually look for strong personal credit, consistent revenue and a proven operating history. You'll also need solid financial documentation and a clear plan for how the funds will be used. A down payment, collateral and a personal guarantee may also be required.
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Christi Gorbett is a freelance writer with more than eight years of experience and a master's degree in English. She’s created a wide range of content for banks, financial product comparison sites, and marketing companies on topics like small business loans, credit cards, mortgages, retirement planning, lender reviews, and more.
As a former teacher, Christi excels at making complex financial topics accessible and easy to understand. Her interest in finance grew when she returned to the U.S. after living in South Korea for nearly a decade.
This shift was driven by several personal financial challenges: rebuilding her financial base after the move home, starting her own business, and catching up on retirement savings. These experiences deepened Christi’s practical understanding of finance and intensified her interest in the field.
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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.
nikkiangcoJune 13, 2019
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.
Learn where to find a low-interest business loan and how to qualify.
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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