Financing to buy an existing business or franchise — structured as an SBA 7(a) loan, a conventional term loan, seller financing, or a loan against your investment portfolio. Most deals blend more than one. Tell Axiant about the deal once, and we match you with acquisition lenders across every structure.
Business acquisition financing is funding used to buy an existing business or franchise — not to start one from scratch. It is an umbrella rather than a single product. A typical acquisition is funded with a mix of an SBA 7(a) loan, a conventional bank term loan, seller financing (a note the seller carries), and sometimes securities-based lending against the buyer’s investment portfolio. Which mix is right depends on three things: the purchase price, how much cash flow the target business throws off, and how much the buyer can put down. Amounts commonly run from about $250,000 to $5 million or more. If you already know your structure, jump to it below; if you’re weighing options, start here.
“Acquisition financing” isn’t one loan — it’s a set of structures that are usually combined. Here are the four, and where to go deeper on each:
The most common path for buying a U.S. small business. The SBA 7(a) program funds up to $5 million, repays over 10 years (longer when real estate is included), and requires a minimum 10% equity injection — part of which can sometimes be a seller note on full standby. It leans on the target’s cash flow, so a profitable business with clean books can be bought with relatively little down. Can you use an SBA loan to buy a business? → · Buying a Business With an SBA Loan
A bank or non-bank term loan sized to the deal, typically with 20–30% down and a faster close than SBA when the buyer’s credit and the target’s financials are strong. Often used for larger, well-established targets or buyers who want to avoid SBA paperwork. How to structure a term loan for acquisition →
The seller finances part of the price with a promissory note you repay over time. It bridges valuation gaps, signals the seller’s confidence, and — when structured on standby — can count toward an SBA equity injection. Almost every well-structured acquisition includes some seller participation. Buying a Business With an SBA Loan
Borrowing against a marketable investment portfolio to fund the purchase without selling assets or triggering capital-gains tax. It closes quickly and keeps your investments working, which suits buyers with substantial portfolios who want speed and low disruption. Using securities-based lending to buy a business →
Deals with real estate (a building, self-storage, a facility) often add a commercial real estate loan on top — see commercial real estate loans and financing a self-storage acquisition.
A quick side-by-side of the four structures. Figures are illustrative 2026 ranges, not quotes — your terms depend on the deal and your profile.
| Structure | Typical down | Best for | Speed |
|---|---|---|---|
| SBA 7(a) | 10%+ (some via standby seller note) | Cash-flowing small businesses; buyers with limited cash | Several weeks |
| Conventional term loan | 20–30% | Strong-credit buyers; larger, established targets | Faster than SBA |
| Seller financing | Negotiated (often 10–30% of price) | Bridging valuation gaps; smoothing transition | As fast as the parties agree |
| Securities-based lending | Little to none (portfolio is the collateral) | Buyers with a portfolio who want speed, no asset sale | Days |
Acquisition underwriting is different from a working-capital loan: the lender is betting on a business you don’t own yet. Five things drive the decision.
Lenders recast the seller’s financials into seller’s discretionary earnings (SDE) or EBITDA and check that it covers the new loan payment with a debt-service-coverage ratio (DSCR) of about 1.25x or better. Cash flow is the single biggest factor.
More skin in the game lowers the lender’s risk. SBA wants at least 10%; conventional wants 20–30%. A standby seller note can help cover the SBA minimum.
Lenders want to see that the buyer can actually run the business — direct experience, transferable management skills, or a strong operator staying on.
The price has to make sense against the earnings. On SBA deals a third-party business valuation is typically required; overpaying can sink an otherwise good file.
Tax returns, P&Ls, and the seller’s add-backs need to tie out. Messy or unverifiable financials are the most common reason acquisition deals stall.
For the SBA-specific version of this checklist, see what lenders look for in SBA approval.
Enter the purchase price and your down payment to see a rough monthly payment. This uses a standard amortized loan at an illustrative rate — adjust to fit your scenario.
Loan amount
$810,000
Est. monthly payment
$11,389
Total interest
$556,637
Estimate only — illustrative rate, not a quote. SBA 7(a) rates are usually variable and tied to prime. See if you qualify for $810,000 →
Checking options won’t affect your credit · no obligation.
Say you’re buying a distribution business for $900,000 that generates about $220,000 in annual SDE. An SBA 7(a) structure might look like this:
10% equity injection = $90,000 (a seller note on standby could cover part of it).
$810,000 over 10 years at an illustrative 11.5% — roughly $11,400/month (about $137,000/year).
$220,000 SDE ÷ ~$137,000 debt service ≈ 1.6x — comfortably above the ~1.25x lenders want, before the buyer’s own salary.
That cushion is what makes the deal fundable. If the same business were priced at $1.3M on the same earnings, the DSCR would fall near 1.1x and most lenders would ask for more down, a bigger seller note, or a lower price. Figures are illustrative; get matched for real terms.
Acquisition financing works across industries, but the details differ. A few we cover in depth:
The best structure isn’t the same for every deal, so don’t take the first term sheet. Match the lender to the situation:
An SBA 7(a) lender is usually the fit.
A conventional term loan can close faster with less paperwork.
Structure in seller financing to bridge it.
Securities-based lending funds the buy without selling assets.
Compare on total cost, closing timeline, the equity injection required, and whether the lender understands your industry — not just the headline rate. Axiant is a commercial-financing brokerage: one application reaches acquisition lenders across all four structures, and we help you compare the real trade-offs side by side. More about Axiant →
Funding used to buy an existing business or franchise — an umbrella for SBA 7(a) loans, conventional term loans, seller financing, and securities-based lending. Most deals combine two or more, and the right mix depends on the price, the target’s cash flow, and the buyer’s down payment. Amounts commonly run $250,000 to $5 million or more.
An SBA 7(a) acquisition requires a minimum 10% equity injection, and part of that can sometimes come from a seller note on full standby. Conventional acquisition loans usually want 20–30% down. Securities-based lending can fund a purchase with little or no cash out of pocket. Stronger target cash flow buys more flexibility on the down payment.
Cash flow first — the target’s SDE or EBITDA should cover the new payment at a DSCR of about 1.25x or better. Then the buyer’s down payment and credit, relevant industry experience, a supportable valuation, and clean, reconciled books. A fair price and a cooperative seller strengthen the file.
Yes — the SBA 7(a) program is the most common way to finance an acquisition. It funds up to $5 million, repays over 10 years (longer with real estate), and requires a 10% minimum equity injection. It works for buying a business outright, a partner buyout, or a franchise. Allow several weeks for SBA underwriting.
They vary by structure. Illustratively, SBA 7(a) acquisition loans are usually variable and tied to prime; conventional term loans vary by bank and borrower; seller notes are negotiated directly. These are illustrative ranges, not quotes — use the estimator above, then get matched for real terms.
Match the lender to the deal: SBA for a cash-flowing business with a modest down payment, conventional for a strong-credit buyer wanting speed, seller financing to bridge a valuation gap, securities-based lending to avoid selling investments. Compare total cost, timeline, equity required, and industry fit. Axiant compares all of these from one application.
Tell us about the deal — the target, the price, and what you can put down — and Axiant matches you with acquisition lenders across SBA 7(a), conventional term loans, seller financing, and securities-based lending. One application, real offers, no obligation.
