Ways to Finance a Business Purchase
| Option | How it works | Good fit when |
|---|---|---|
| SBA 7(a) loan | Bank or approved lender loan partly guaranteed by the SBA; long terms | You can meet equity and documentation requirements and wait for approval |
| Seller financing | The seller lets you pay part of the price over time | The seller wants a smooth transition and you need to reduce cash at closing |
| Conventional term loan | Bank or online lender loan with a fixed payment | Strong credit, financials, and collateral |
| Equipment or real estate financing | Finance the assets in the deal separately | The purchase includes significant equipment or property |
| Your own equity and investors | Cash, partners, or investors | Lenders require a down payment, or you want less debt |
What Lenders Look At
- The business's cash flow: several years of tax returns and financial statements showing it can repay the loan; see debt service coverage ratio.
- Your equity injection: the cash you put in. SBA rules require buyers to inject equity, commonly at least 10% of total project costs, with strict limits on counting a seller note.
- Your experience running a similar business, and a transition plan with the seller.
- Valuation and terms: a letter of intent, purchase agreement, and often a business valuation.
- Personal credit and guarantee from buyers.
SBA rules for business acquisitions were updated in SOP 50 10 8 and again in SOP 50 10 8.1, effective October 1, 2026. Confirm the current equity, seller note, and cash flow requirements with an SBA lender before you sign a letter of intent.
Example: How the Numbers Fit Together
| Item | Amount |
|---|---|
| Purchase price | $500,000 |
| Working capital after closing | $50,000 |
| Closing costs and fees | $30,000 |
| Total project cost | $580,000 |
| Buyer equity at 10% of total project cost | $58,000 |
| Financed amount (loan and any qualifying seller note) | $522,000 |
Hypothetical example for illustration only. Actual equity, terms, and eligibility depend on the lender and current SBA rules.
How to Get a Loan to Buy a Business
Get your finances ready
Check personal credit, gather personal tax returns, and confirm how much cash you can inject.
Review the business
Request at least 3 years of tax returns and financial statements, and look at customer concentration and trends.
Sign a letter of intent
Agree on price, structure, and contingencies such as financing and due diligence.
Apply with lenders
Bring the LOI, the business's financials, your resume, and a short business plan for after the purchase.
Close and transition
Complete due diligence, close the loan, and follow the transition plan with the seller.
Planning a business purchase?
One 60-second form, soft check only. A specialist explains which acquisition financing options fit.
Frequently Asked Questions
How do I get a loan to buy a business?
Most buyers use an SBA 7(a) loan, seller financing, a conventional loan, or a mix. Lenders review the target business's cash flow, your equity injection, your experience, and your personal credit.
How much down payment do I need to buy a business?
SBA acquisition loans require an equity injection, commonly at least 10% of total project costs under recent rules, and conventional lenders often want more. Rules were updated effective October 1, 2026, so confirm with your lender.
Can a seller note count toward my down payment?
Under SBA rules, a seller note can count toward part of the required equity only if it meets strict conditions, such as full standby. Ask your SBA lender how the current rules apply.
What documents do lenders need to buy a business?
Typically the letter of intent or purchase agreement, 3 years of the business's tax returns and financial statements, your personal financial statement and tax returns, a resume, and a business plan.
How long does it take to get a business acquisition loan?
Often 60 to 90 days or more for SBA loans, depending on due diligence, valuation, and documentation.