Buying an existing business is one of the smartest ways to grow — you acquire customers, cash flow, and a track record instead of building from zero. A business acquisition loan finances that purchase, and for most small-business deals it means one thing above all: an SBA 7(a) loan.
How acquisition financing works
The SBA 7(a) program is the workhorse for buying a business — it can fund a change of ownership up to $5 million. What makes acquisition lending distinctive is what the lender underwrites: not just you, but the business you’re buying.
- The target business’s cash flow does much of the heavy lifting — the lender wants to see it can comfortably cover the new loan payment.
- You, the buyer, still matter — your credit, experience, and the down payment you bring.
- The deal structure — purchase price, seller financing, and your equity — has to fit SBA rules.
What you’ll need to bring
Plan on a real down payment
Current SBA rules require at least a 10% equity injection (down payment) on a change of ownership. A seller note can count toward it only if it’s on full standby for the loan term, and a seller note can cover at most half of the required injection — so most of it needs to be real cash. We break this down in our SBA down-payment guide.
What lenders evaluate
- The business’s financials — historical cash flow, profitability, and trends.
- A fair purchase price — usually supported by a business valuation.
- The buyer — relevant experience, credit, and management ability.
- The structure — how the price is funded across the loan, your equity, and any seller financing.
For the full process, see how to finance buying a business.
Beyond SBA 7(a)
SBA 7(a) is the most common path, but not the only one: conventional acquisition loans exist for stronger buyers and businesses, and seller financing frequently fills part of the gap. If you’re buying out a co-owner rather than a whole company, see partner buyout financing.
How to compare and apply
Acquisition deals reward preparation — line up the target’s financials, a valuation, and your own documents early. A marketplace or SBA-focused lender can help you find the right fit.
Marketplaces and lenders that work with SBA and acquisition financing. Listed alphabetically — not ranked.
| Provider | Type | Often suits | Visit |
|---|---|---|---|
| Funding Circle Online lender offering term loans and SBA 7(a) loans for established businesses. | Online lender | Larger term loans and SBA 7(a) | Visit Funding Circle (opens in a new tab) |
| Lendio A free marketplace that matches one application to 75+ small-business lenders. | Marketplace | Comparing many lenders at once | Visit Lendio (opens in a new tab) |
| SmartBiz An SBA-focused marketplace that matches applicants to bank partners for SBA and term loans. | SBA marketplace | Streamlined SBA applications | Visit SmartBiz (opens in a new tab) |
The bottom line
A business acquisition loan — usually an SBA 7(a) — lets the business you’re buying help pay for itself, since its cash flow anchors the underwriting. Plan for a 10% minimum down payment, get the target’s financials and a valuation in order, and confirm current SBA rules and terms with your lender, since they change.
Frequently asked questions
- How do you finance buying a business?
- The most common route is an SBA 7(a) loan, which can fund a change of ownership up to $5 million. Lenders look at the target business's cash flow (can it support the loan payment?) and at you as the buyer. You'll typically need a minimum 10% down payment, and seller financing often fills part of the structure.
- Can I use an SBA loan to buy a business?
- Yes — business acquisition is one of the core uses of the SBA 7(a) program. The SBA guarantee lets lenders offer longer terms and competitive pricing for a change of ownership, in exchange for more paperwork and a slower close.
- How much money do I need to buy a business?
- For an SBA-backed acquisition, current rules require at least a 10% equity injection (down payment). Some of that can come from a seller note only if it's on full standby, and a seller note can cover at most half of the required injection — so plan on real cash. See our down-payment guide for the specifics.
Sources
Loan programs, rates, and eligibility change. We re-check sources on the “updated” date, but always confirm current terms directly with a provider.