What is a Business Acquisition Loan?
Going into business for yourself is a common, yet admirable, goal that many people share. Some people hate being at the bottom of the food chain and would rather call the shots themselves; others just want to be able to provide a better life for their families and one day pass the company onto their children. Whatever may be the reason for wanting to start your own business, it’s going to take a lot of hard work if you’re going to be successful.
There are many different ways to pursue your entrepreneurial dreams. Of course, you could start up your own company, but there are some other methods for becoming a business owner, as well. You can consider purchasing an existing business, or even open up a new franchise. However, similar to starting your own business, these options require a source of funding for business acquisition to cover all of the necessary expenses.
Financing a business acquisition is complicated if you don’t know where to start, and sorting through all of the funding options out there can be exhausting. A business acquisition loan can be used to purchase an already successful company, new franchise location, or even buy out your current business partner. As you can see, business acquisition financing is versatile which makes it very appealing to entrepreneurs, so qualifying for a small business acquisition loan can be difficult.
You could head to a traditional bank for a business acquisition loan, but banking institutions typically have strict requirements, so you might have to apply with a few different banks before being approved for a small business acquisition loan. Another drawback is that since the requirements needed to be approved are so rigid, the application process can take an extended period. This means that it could be months before you receive an approval for a business acquisition loan, let alone receive your funding.
Another possible lender to consider for a business acquisition loan is the Small Business Administration. You could apply for an SBA 7(a) loan for financing a business acquisition, but you’ll have to provide a down payment of anywhere from 10% to 30%, and you’ll need a credit score of at least 680 to be approved. And, on top of that, the business you’re interested in will have to be financially strong, and you’ll most likely have to front some collateral.
How Are Small Business Acquisition Loans Used?
With so many forms of business funding available, it can be confusing comparing loan options and deciding what is best for your financial situation. Business acquisition financing differs from traditional term loans in that you must use it to purchase a company, rather than start a business from the ground up. Some entrepreneurs choose to go about business this way because financing a business acquisition can be less risky than starting a company from scratch.
As mentioned earlier, small business acquisition loans are a versatile type of funding. The loan can be used for financing a business acquisition in different ways, including:
- Buying a company that has already shown success. In this scenario, you’re deciding to use the business acquisition loan to expand your portfolio by purchasing a company from its current owner and making it your own.
- Opening a new franchise location. With this option, you are using the business acquisition loan to purchase a chain – whether it be a restaurant, store, etc. – and running that particular location.
- Taking over your business partner’s share. In this case, the business acquisition loan is used to buy out your partner or partners in a company that you already operate. By doing this, you become the sole owner of your business.
The advantage of obtaining a small business acquisition loan is that even though it’s specifically meant to be used towards purchasing an already existing business, it still offers this flexibility in how you choose to spend the business acquisition financing, making it different from traditional term loans.
But, the problem with business acquisition financing varying from the standard startup business plan, is that small business acquisition loan lenders try to make the process more difficult for aspiring entrepreneurs.
Financing a Business Acquisition With Fast Capital 360
At Fast Capital 360, we know how difficult it can be to obtain funding for business acquisitions, which is why we offer business acquisition financing options without the hassle that many have come to expect from traditional banks. Our small business acquisition loan alternatives can get you the funding that you need in an efficient manner.
Funding for business acquisitions can be even more difficult to obtain than your traditional funding options that help finance going into business on your own. This is because similar to entrepreneurs, banks know this is a less risky option for you, and therefore choose to make the application for small business acquisition loans that much more of a complicated process.
Fast Capital 360 doesn’t possess the same stern mindset towards business acquisition loans as traditional banking institutions. Instead, we make the entire process quick and easy to understand. While traditional banks and the SBA make you jump through hoops just to qualify for a business acquisition loan, we only worry about the important factors.
To qualify for funding with Fast Capital 360, we ask that you have been in business for at least six months, earn $120,000 annually in revenue, and have a FICO credit score of 520+. If you’re eligible, all you have to do is complete a short online application to get started. We will find the right business acquisition financing option for you, even if it’s not with us.
If you are ready to explore our business acquisition loan alternatives, give us a call today at 1-800-735-6107 to speak with a dedicated Business Advisor. Or, if you would rather start the process right away, head over to our online application to get a decision in little to no time.