Business acquisition loans are those types of commercial financing which are used by a business owner to acquire another business. In most cases, the acquiring business owner will not have the capital to pull off the transaction by themselves, and thus will require funding from some type of lender. If you have a solid business plan and you have also taken steps to establish good credit history, it will be much easier for you to acquire the business acquisition loan you need.
The most popular form of financing option for a business acquisition loan is a term loan. If you successfully apply for a term loan, you would then receive some amount of money that can be repaid for as long as five years. This appeals to a great many small businesses because it means the monthly repayment will be affordable and can be easily budgeted. You’ll also find that interest rates on term loans are generally lower than with some other financing options, and that contributes to their general appeal.
If you don’t qualify for a term loan, you might still be able to acquire a short-term loan from a lender. You would have to pay back the loan in a much shorter period, generally two years or less, so you would be required to make much higher payments every month.
Another possibility, if you can’t acquire a term loan, would be an SBA loan, and of the types of loans offered by the SBA, it is 7(a) loan program is by far the most popular. Through this program, you can borrow up to $5 million, and you could pay it off over some time as long as 25 years, depending on how you make use of the funds.
When you’re trying to buy a small business for the first time, you will find that your available options are far more restricted. This is because you have so little business history that lenders are less inclined to grant you the funding you need. In this situation, a lender would look much more closely at your finances, and you would probably need to supply some form of collateral to secure the loan.
Need Business Acquisition Financing?
If so, we may be able to provide you with the funding you require. Contact us at Jasmea Capital so we can explore some options with you regarding your acquisition.