Some people are comfortable with a slow and steady way of growing their business. Others are risk-takers, and so they apply for a business loan to help them reach their business goals sooner. One major way to speed up the success of a business is by purchasing an already established company that is past the challenging startup phase. If this is an option you have considered, then you will need a business acquisition loan.
A business loan helps you in the following ways:
Purchase an already successful company
Skip the challenging startup phase of a business
Grow your business through acquiring competing companies
Open a new franchise of an existing company
Buy out your partner’s interest in your business.
Funding Sources to Purchase the Existing Business
There are several sources of finance that you can consider to help you acquire a business acquisition loan. They include:
SBA Lenders
A common source of finance for small businesses is Small Business Administration lenders. Usually, the loan is flexible and not just meant for acquiring an existing business. What makes this an attractive option is because it is affordable to small business owners with low interest rates.
An Alternative Lender
As much as an SBA is ideal for small business owners, it might not be a suitable fit for all businesses. People who do not qualify for SBA loans can opt for alternative lenders. Non-bank lenders provide a business acquisition loan as well. Most of the time, it is easy to meet the requirements of alternative lenders as they are not strict compared to traditional lenders. However, with that flexibility comes a high interest rate and fee.
Seller Financing
There are business owners who are willing to offer seller financing when you are buying their business. Instead of you approaching a bank or an alternative lender, the seller deals with the loan process. However, you will have to make a sizeable down payment for the business and pay the rest in installments per your agreement with the seller.
Equipment Loan
If the business you are purchasing comes with equipment, you may cover that part of your business with an equipment loan. You will find that a significant amount of the asking price covers the cost of equipment.
Has a particular business piqued your interest, but you lack the funds to purchase it? Contact KPI and discuss how you can get a business acquisition loan.
