Business acquisition financing
Buying a business? Get the structure right before you sign the LOI.
Price, cash in, seller note and cash flow all have to fit together before a lender will. Tell us the deal in your own words and we'll show you how it could be financed, where it is thin, and what to change.
Tell us your plan Try the calculator
- We don't pull your credit to start
- Not a lender, not the SBA
- You decide what happens next
How an acquisition gets financed
Most acquisitions are paid for with three sources. The mix, and how each is treated, is where deals are won or lost.
| Source | Role in the deal | Watch for |
|---|---|---|
| SBA-backed bank loan | Usually the largest piece. Repaid over a long term from the business's cash flow. | Total payments must be covered by cash flow with room to spare. |
| Your cash | The equity injection. Documented, with a clear source. | A minimum applies (10% of the project for a typical purchase); borrowed or gifted funds get extra scrutiny. |
| Seller note | The seller finances part of the price and stays invested in a smooth handover. | On full standby it can count toward your cash; with payments it adds to debt service. |
What a lender actually tests
The business
- Several years of earnings, adjusted for one-time and owner-specific items
- Whether the cash flow covers all debt payments with margin (DSCR)
- Customer concentration, lease terms, key contracts that must transfer
- Whether the price is supported by the numbers
You
- Household cash flow, not just the business's (global coverage)
- Liquidity left after closing
- Relevant experience and a credible transition plan
- Program eligibility, including ownership and citizenship rules (all owners must be U.S. citizens or U.S. nationals living in the U.S.)
Where acquisition deals break
- Add-backs that do not survive scrutiny. A price built on aggressive owner add-backs falls apart when the lender haircuts them.
- Records that do not tie. Tax returns, books and the seller's story need to agree.
- A strong business inside a stretched household. This is the quiet one. Business coverage looks fine; global coverage does not.
- A price agreed before the structure. Terms are far easier to shape before the LOI than after.
- Late eligibility surprises. An ownership or business-type issue that day-one screening would have caught.
What we do with your plan
- Capture it in your words.An AI assistant (it says so) asks follow-up questions. A person may review what you share.
- Build the package.Sources and uses, business and global cash-flow read, open gaps, a document checklist.
- Lay out your options.SBA 7(a), conventional, seller financing, a mix. Costs, cash required and tradeoffs, side by side.
- You choose.Take it to your own bank, or, only with your consent, to SBA lenders who may be a fit.
Honest about fit. This is built for structured acquisitions. If you need quick capital, merchant-cash-advance style funding, or help covering short-term cash pressure, your local Small Business Development Center or a nonprofit lender is usually a better first call, and we will point you there.
Common questions
Can I finance a business acquisition with an SBA loan?
Yes. Buying an existing business is one of the most common uses of the 7(a) program. The purchase is treated as a change of ownership, which brings specific rules on how much cash you contribute, how a seller note is treated, and how much cash flow must cover the payments.
How much cash do I need to bring?
It depends on the total project (price plus closing costs, fees and any working capital) and on how the deal is structured. A minimum applies to changes of ownership, and a seller note can sometimes count toward part of it. Our equity injection guide works through an example, and the acquisition calculator lets you test your own numbers.
Do I need industry experience?
Lenders look hard at your ability to run the business. Direct experience helps a great deal. A strong transition plan with the seller, or experienced management can also carry weight. A lender will tell you what they want to see.
What if the seller wants an earnout?
Contingent payments complicate the price a lender can underwrite, and seller earnouts are not allowed under the current SBA rulebook. Raise it before a letter of intent, not after. See the equity injection guide and what an earnout is.
Is an SBA loan the only way to buy a business?
No. Conventional bank financing, seller financing, a partner or investor, or a mix can all work, and sometimes work better. We show the options side by side, including ones that are not an SBA loan. See SBA vs. conventional vs. seller financing.
Go deeper
Tell us what you are trying to do
Describe it in a few sentences. No documents needed to start, we do not pull your credit, and there is no obligation.
General information, not legal, tax or financial advice. Precise SBA is not a lender and is not affiliated with the U.S. Small Business Administration. All financing is subject to lender underwriting and SBA program rules. Examples use hypothetical numbers. We never charge you. If a loan closes, the lender may pay us a referral fee, disclosed on SBA Form 159 (how we get paid).