(800) 949-0401 Apply NowAcquiring a business is one of the fastest paths to significant revenue growth — you get customers, cash flow, infrastructure, and brand equity from day one. Business acquisition loans provide structured financing to close deals ranging from Main Street purchases to complex middle-market transactions, with terms aligned to the acquired business's earnings power rather than the buyer's existing balance sheet.
A business acquisition loan is financing specifically structured to fund the purchase of an existing business, a franchise, or a controlling interest in a company. Unlike working capital loans that fund operations, acquisition loans are transaction financing — capital deployed to complete a specific purchase and repaid over the acquired business's productive life using its own earnings.
Acquisition loans are underwritten differently from standard business loans. Lenders focus heavily on the target business's historical cash flow (EBITDA), the purchase price relative to earnings (price-to-EBITDA multiple), the buyer's management experience, and the terms of the purchase agreement. The acquired business's ability to service the debt from its own cash flow is the primary repayment source.
The most common acquisition financing is the SBA 7(a) program, which guarantees up to $5M for business acquisitions, franchise purchases, and partner buyouts. Per SBA 7(a) program guidelines, business acquisitions are an explicitly eligible use. Crestmont structures acquisition financing across multiple programs.
| Requirement | Typical Threshold | Notes |
|---|---|---|
| Target Business DSCR | 1.25x minimum after debt service | Acquired business cash flow must cover loan payments |
| Buyer Management Experience | Industry or management experience required | SBA requires buyer's personal resume and background |
| Buyer's Personal Credit | 680+ preferred | Personal guarantee required for most acquisition loans |
| Down Payment / Equity | 10-30% typically required | SBA 7(a) often requires 10% on acquisitions |
| Seller Financing | Often requested by SBA lenders | Seller note of 10-15% demonstrates confidence |
| Business Operating History | Target must have 2+ years financials | Lenders need historical performance data |
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Apply Now →| Cost Factor | Typical Range | What to Know |
|---|---|---|
| SBA 7(a) Rate | Prime + 2.75%-3.75% (~11-12% currently) | Maximum SBA-allowed rate |
| Conventional Acquisition Loan | 6%-15% APR | Bank or alternative lender programs |
| SBA Loan Amount | Up to $5,000,000 | Guaranteed portion up to $3.75M |
| Term Length | 10-25 years | Longer terms for higher amounts with real estate |
| SBA Guarantee Fee | 0.5%-3.5% of guaranteed portion | Based on loan size and term |
| Down Payment | 10%-30% | 10% minimum for SBA-eligible transactions |
Unlike startups building revenue from scratch, acquired businesses generate cash flow from day one. Acquisition financing lets you deploy capital to purchase an asset that immediately produces income to service the debt.
SBA 7(a) acquisition loans offer 10-year terms with 10% down at regulated rates — among the most favorable acquisition structures available to U.S. small businesses.
Well-structured acquisitions often include a seller note — the seller carries 10-20% of purchase price as a subordinated loan. This reduces buyer cash at closing, demonstrates seller confidence, and provides lenders additional security.
SBA acquisition loans explicitly fund franchise purchases for approved franchise systems, combining favorable program terms with historical performance data to support underwriting.
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Check My Options →A marketing executive buys a $450,000 landscaping company with $120,000 EBITDA and 200 established clients. An SBA 7(a) loan provides $405,000 (90%) at 10.5% over 10 years; the buyer contributes $45,000 as equity. Business cash flow covers $65,000 annual loan payments, leaving $55,000 for owner salary and reinvestment.
An HVAC company acquires a competitor with $1.8M in revenue for $900,000 — a 5x EBITDA multiple. Structured with 15% seller financing and conventional bank financing at 8.5%, the deal closes in 6 weeks. Combined revenue exceeds $4.5M post-close with eliminated duplicate overhead.
A couple purchases a $350,000 fast-casual restaurant franchise using an SBA 7(a) loan. The franchise is SBA-approved; financing covers franchise fee, equipment, leasehold improvements, and 6 months working capital.
| Product | Approval Speed | Rate Range | Best For |
|---|---|---|---|
| SBA 7(a) Acquisition | 4-8 weeks | Prime+2.75-3.75% | Best terms, 10% down, $5M max |
| Conventional Bank Acquisition | 3-6 weeks | 6%-12% APR | No SBA guarantee, stricter credit |
| Alternative Acquisition Loan | 1-3 weeks | 10%-20% APR | Faster, less documentation, higher rate |
| Seller Financing Only | Negotiated | 5%-8% typical | No lender, seller carries all paper |
| Private Equity / Rollup | 1-3 months | Equity-based | Loss of ownership, larger deals |
| Bridge Loan | 5-15 days | 8%-18% APR | For acquisition timing gaps only |
Join thousands of businesses who chose Crestmont Capital for fast, transparent business funding.
Apply Today →Crestmont Capital has structured acquisition financing across dozens of industries and transaction sizes. Our team understands deal structuring, SBA program optimization, seller financing integration, and closing timeline management.
Related: bridge loans for acquisition timing gaps, working capital lines post-acquisition, and commercial financing for real estate included in the acquisition.
True zero-down acquisition financing is extremely rare. SBA 7(a) typically requires 10% buyer equity injection. However, seller financing (where the seller carries a subordinated note of 10-15%) can minimize cash-at-closing while satisfying SBA equity injection requirements.
Lenders analyze the acquired business's EBITDA and calculate how much debt the business can service at their required coverage ratio (typically 1.25x DSCR). The purchase price is also evaluated as an EBITDA multiple — typically 3-6x for Main Street businesses.
Yes. Business acquisitions, franchise purchases, and partner buyouts are explicitly eligible uses of SBA 7(a) loan proceeds. The SBA guarantee enables lenders to offer 10-year terms and 10% down payments that conventional financing can't match.
Employment continues under the new owner. Most purchase agreements include employee retention provisions. Your business plan for the acquisition should address workforce continuity — lenders view it as essential to ongoing business value.
SBA 7(a) acquisitions: 4-8 weeks. Conventional bank: 3-6 weeks. Alternative lender programs: 2-3 weeks. Build timeline expectations into your purchase agreement's closing deadline.
Yes, but relevant industry or management experience is important. A strong resume demonstrating related experience, or a seller transition agreement where the previous owner stays on temporarily, supports first-time buyer approval.
Fast decisions. Competitive terms. Dedicated funding advisors. Apply now with Crestmont Capital.
Get Funded Now →Disclaimer: The information provided on this page is for general educational purposes only and is not financial, legal, or tax advice. Funding terms, qualifications, and product availability may vary and are subject to change without notice. Crestmont Capital does not guarantee approval, rates, or specific outcomes. For personalized information about your business funding options, contact our team directly.
