Everything You Need To Know About Business Acquisition Loans
by Henry S. Growing Your Business Has Never Been EasierBuying an existing company is one of the most important means of growth of your business, especially if the business has strong credibility, an established customer base, and a proven track record.
It can be a challenging and time-consuming endeavor to find the right business to acquire. Searching and finding the right small business funding to finance that acquisition can even more complicated.
Wondering what are the different business acquisition loan options? Well, you have come to the right place. In this post, we’ll share all the important things you need to know about this great small business financing.
What is a Business Acquisition Loan?
Like the name suggest, a business acquisition loan is used for acquiring or opening a new franchise. The amount of loan and rate of interest will depend on the business you’re buying and your own qualifications. The loan amount can range from $5,000 to $5,000,000.
This loan can be used for a variety of different challenges, from purchasing a reputed company to growing your existing company by acquiring a competing company, purchasing a new franchise, and avoiding the start-up period of building a business.
What are the qualification requirements of a Business Acquisition Loan?
Since there are various types of business acquisition loans, qualification requirements depend on the type of loan you’re applying to. Here are some of the common factors that lenders consider when reviewing your personal and business finances.
- Personal Credit Score - You must have a credit score from 650 to 700 or above to qualify for the loan
- Business Credit Score – You must have a decent business credit score (at least 600) to get a business acquisition loan.
- Tax Returns – You need to provide three years of personal tax returns and also corporate tax returns on the business you’re going to acquire.
- Business Financial Statements- You need to provide cash flow statements, balance sheets, and P&L statements of the business you’re going to acquire.
- Outstanding Debt – You need to provide the list of all outstanding debt of your business.
- Business Valuation – You need to provide a formal valuation of the business you’re going to acquire.
- Business Plan – You need to provide the plan and strategy to grow both your and acquired business.
What Documents do you need To Apply for a Business Acquisition Loan?
- Business Plan
- Business Tax Return
- Personal Financial and Background Statements
- Balance Sheet
- Business Debt Schedule
- Personal Tax Return
- Business License
- Bank Statement
- Business Lease Agreement
Business acquisition loans are a great financing option for small businesses because they:
- Can be used to finance portions of the business that are not secured by collateral.
- Make it possible for entrepreneurs to acquire and expand sooner than would otherwise be possible.
- Help growing business with limited credit history to secure desired capital.
- Have quick turnaround times, with some online alternative lenders offering approval in as little as 24-48 hours.
The SBA Loan
Loan Amount – From $30,000 to $5 million
Interest Rate – Anywhere between 5 to 10 percent
Repayment Terms – 10 years for most loans and 25 years for real estate loans
Business Term Loans
Loan Amount – from $25K to $500K
Interest Rate – Though the interest rate is fixed, the borrower can negotiate
Repayment terms – 5 to 10 years
Startup Loans
Loan Amount – $500-$750,000
Interest Rate – 0-17%
Repayment Terms – 6 months to 5 years
Equipment Financing
Loan Amount – $5,000-5,000,000
Interest Rate – As low as 7.5%
Repayment Terms – 1-5 years
Final Thoughts
There are a plethora of options to secure financing for your small business. However, if you’re planning to acquire an existing business, then applying for a business acquisition loan is the perfect decision. Use an online lending marketplace to find and compare a variety of business acquisition loan offers from multiple lenders. Once approved, you can get the cash into your bank account in as little as 24-48 hours.
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Created on Dec 20th 2020 23:55. Viewed 263 times.
Comments
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thank you for sharing such helpful information.. Thank Jan 4th 2021 23:42 |
How do I get the loan on existing business?
Dec 21st 2020 08:39