Business Acquisition Loan
We fund small business loans nationwide
What is a Business Acquisition Loan
A business acquisition loan is exactly what it seems like: a loan to get a business. With this specific kind of loan, you’re buying a business that already exists. You are not starting a business from the ground up.
As you ponder purchasing a business, you have to ensure this is an ideal time for doing so. You must examine your own financial situation, and afterward, additionally comprehend how to raise debt and equity simultaneously. Because you have some debt as of now doesn’t mean you’re automatically exempt from the business acquisition game.
Gaining an already fruitful business will enable you to stay away from standard startup anxiety and stress. On the off chance that you see business that is, as of now, working and know you can improve it, a business acquisition loan will assist you with making this move effectively. You can even obtain 100% business acquisition loans with the correct lender.
Types of Business Acquisition Loans
1. SBA Loan
The SBA is the United States Small Business Administration, an independent agency of the federal government. They aid, counsel, assist, and protect small businesses. They exist to help strengthen the United States’ economy by protecting free competitive enterprise. They exist to enable small businesses to flourish.
A SBA loan, in this way, is a loan that the US SBA backs. The SBA will back up to 85 percent of what the bank will loan you, and this means less risk for the bank. It additionally means the bank can offer a lower interest rate and longer repayment terms.
A SBA loan is one of the greatest quality loans out there. It accompanies a long application procedure, and takes time for acceptance and processing. In the event that you go this course, you will need patience when applying for a SBA loan, however the end result will be worth it.
2. Traditional Bank Loan
In the event that you go down to your local bank and get some information about a business acquisition loan, you will go through a lot more procedures, in contrast to online lenders. They will cautiously look at your qualifications, including financial records of the business you want to gain. They will want to ensure they’re facing a decent risk.
3. Equipment Financing
In some cases, you have to finance the equipment you need more than you have to finance the business itself. You can procure an equipment loan from a local bank as well. The best part is that you don’t have to give collateral for equipment financing since the equipment itself is your guarantee.
How does a Business Acquisition Loan Work
A business acquisition loan is a type of financing you can use to buy a current business or to open a new franchise. These loans can be a decent answer for various difficulties. A business acquisition loan can support you:
- Purchase a company that is already successful
- Skip the start-up phase of building a business
- Grow your existing business by acquiring a competing company
- Open a new franchise location of an existing company
- Buy out a partner’s interest in your existing business
Why Apply for a Business Acquisition Loan
In case you’re searching for a loan to purchase a business, this one is customized for you. A business acquisition loan causes you to focus in on the advantages of buying a current business or franchise rather than going the startup course—all with terms and rates explicitly intended to address your issues.
The startup period of any business can be quite backbreaking. Jumping to the “set up business” stage can spare you cerebral pain and give you a leg up in small business. Purchasing an existing business or franchise empowers you to get straight down to business and influence existing resources to accelerate your development—which often means you can go further, quicker.
Business acquisition loan sums range from $5,000 as far as possible up to $5,000,000.
How to Apply for a Business Acquisition Loan
Anytime you borrow cash, you’re asking for somebody to take a risk on you. You have to demonstrate that you will be a decent risk to take. This means you have to demonstrate that you can repay the lender, and that you’ll take great consideration of the cash that they loan you.
Your lender will not know you, so you will need something beyond your great character as proof that you’re a good risk.
The lender will inspect your credit history, your record as a business person, and the revenue of the business you want to buy.
With a business acquisition loan, the bank is inspecting both you as a borrower, as well as the viability of the business itself. The lender will want to ensure the business is really bringing in cash and that you can run it well.
Begin gathering the vital records as you investigate business acquisition lenders. You will need records of the business’ financial value and success. You will likewise need your own business plan and financial projections for the business.
You have to have your own business record in writing as well, demonstrating that you understand how to run a business. Your own personal success matters the same amount as the accomplishment of the business before you take possession.
Here is a rundown of some of the requirements you will need:
- The Debt Schedule of the Business – a list of all the debts and liabilities the business already has.
- Financial Statements – at least three years of financial statements from the business you want to buy (must include profit and loss statements, balance sheets, and cash flow statements).
- Tax Returns – three years’ worth of personal and corporate tax returns for you and the business.
- Personal Financial Statement – form 413 for all relevant financial information about you. If applicable, your partner needs to have form 413 ready too.
- Personal Information – information about the borrower (you). The lender will want information about past government financing and any key individuals in the business.
- Personal Credit Statements – good credit; in particular, a credit score of anywhere from 650 to 690.
- Signed Letter of Intent – ensure that this letter of intent has a clause that says the offer depends on you getting the necessary financing for the purchase.