Buying an existing business? Buying out your business partner? Purchasing a franchise? If so, you may be looking for what is known as a business acquisition loan, business acquisition funding or a business purchase loan – all terms used to describe the financing to acquire an existing business. The term business acquisition loan can be confusing to business owners for two main reasons. First, business acquisition loans are occasionally used to refinance existing business loans. And second because there are many sub-categories of a business acquisition loan that could include a franchise loan, franchise purchase, franchise funding, SBA loan, commercial loan, etc.
On this page we hope to teach you more about the term “business acquisition loan” to put your mind at ease that you’re in the right place and hopefully you’ll call us to tell us more about your financing objectives because OUR business is helping YOUR business.
Business Acquisition Cleveland OH
Do I Need A Business Acquisition Loan?
If you’re still trying to figure out if the loan that fits your needs is a business acquisition loan, it might be easier to understand what a business acquisition loan IS NOT. It’s not a startup business loan because you can’t acquire something that hasn’t started yet. It’s not a construction equipment loan, an investment property loan or a commercial real estate loan because the primary purpose is to finance an existing business rather than to purchase equipment or property. And it clearly isn’t a church loan or medical working capital loan.
Including Working Capital & Equipment in Business Acquisition Loans
Usually if you’re buying a franchise, an existing business or buying out a business you may be part owner of, you would be looking for business acquisition financing. Even if you want to include financing to cover working capital and equipment, if it’s all part of financing or refinancing an existing business it’s likely to be referred to as a business acquisition loan.
How to Qualify for a Business Acquisition Loan
First, it’s important to say that you are not expected to research and research before you determine what type of business loan to apply for and whether or not you’ll qualify. It’s much easier to pick up the phone and talk with someone who’s an expert, or go into your local bank and speak with their commercial lending expert. The local banks are nice because you can have a friendly, informative conversation and they’re typically very low-pressure. However, business acquisition loans are considered a higher risk for a local lender to take into their portfolio so unless the business has an amazing reputation in your community, you have a stellar credit score, healthy cash flow statements, high profit margins, years of related experience, an impressive business plan and a convincing business valuation the local bank will not likely be the place to secure your business acquisition loan but instead a nice place to secure information from a trusted source.
Then we would recommend calling us, Active Business Loans, or another reputable, ethical source of low-pressure, experienced, informative and reliable facts regarding your business acquisition loan process. Avoid filling out online applications to a lead-generating site like Lending Tree, Funding Circle, Lendio, Biz 2 Credit or any of the others that pop-up first in search results. Unfortunately, that can result in many solicitations, phone calls, credit pulls, conflicting information and quite honestly – frustration you don’t have time for.
Business Acquisition Financing
Although this is not a comprehensive list, and every case could generate a more detailed list of requirements for obtaining business acquisition financing, this will give you an idea of what types of things a lender will ask for when considering your case: (remember at Active Business Loans we work with private business lenders and investors so we can make loans on a case by case scenario)
- purchase price
- business valuation – cash flow, assets, profit margin
- growth plans / business plan
- collateral – company’s assets or buyers assets
- credit score – personal & business
- balance sheet (assets and liabilities, or debts)
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Looking for construction or manufacturing equipment? Not only do we have a number of construction equipment financing options, we also work with private lenders and investors so if your business doesn’t fit the typical mold, we can usually still make a case to get your equipment financed.