A business acquisition loan provides cash-flow-based financing to buy an existing company, with up to about 90% of Total Project Cost financed and working capital structured inside the same loan to help business buyers fund the transaction’s needs in one process.
At TowneBank SBA Lending, our SBA lending team works with many first-time buyers and their brokers, so we understand the questions that arise when a promising deal becomes real.
As a starting point for SBA loan requirements, U.S. citizens who own for-profit, U.S.-incorporated entities can apply.
Have questions about SBA financing? Tell us about your project, and a member of our SBA Lending team will help you explore potential financing options and next steps.
Every acquisition is different, but the buyers we work with often arrive at the same crossroads: they've found a good business, and now they need financing that fits the opportunity.
You found the right business but do not have 25% of the purchase price available, plus fees and closing costs. SBA financing often requires substantially less cash at closing, helping make the acquisition possible.
You are acquiring a competitor on the seller’s timeline, so financing needs to keep pace. Our SBA-only team and in-house credit decisions keep the deal moving through the approval process.
Your deal has a broker, a timeline, and potentially other interested buyers. A lender that has closed countless business
Every acquisition runs on an SBA 7(a) loan. What changes is how the deal is built around it.
For you if the seller owns the real estate and it's part of the deal. The 7(a) loan can finance the entire transaction, or we can combine a 7(a) for the business and a 504 for the real estate. We can develop a customized structure that best meets your needs.
For you if the purchase is the company itself, including its customers, staff, equipment, and goodwill. A single SBA 7(a) loan finances up to about 90% of Total Project Cost, with working capital included in the same loan.
For you if the business will need flexible cash after closing for inventory, payroll, or seasonal swings. Working capital travels with the acquisition financing, helping you preserve cash for the day-to-day needs of the business after the purchase is complete.
An SBA business acquisition loan is primarily cash-flow based: our lenders ask whether the business you are buying can service the debt. Deals with limited collateral can still work because the SBA guarantee helps mitigate a collateral shortfall.
The SBA 7(a) loan structure can finance up to about 90% of Total Project Cost, with 10- to 25-year fully amortized terms, no covenants, and working capital included in the same loan.
Finance up to approximately 90% of Total Project Cost while preserving more capital for operating needs.
Working capital can be included within the same loan, helping buyers finance multiple transaction needs in one structure.
Terms ranging from 10 to 25 years can help support cash flow following an acquisition.
Plus, if the deal includes the business and the building, we can structure the entire deal with a long term 7(a) loan that finances up to 90% of the entire project. If it works better for you, we can also structure a 7(a) loan to buy the business and a 504 loan for the building. We develop customized loan structures that meet your individual needs and set you up for long-term success.
A seller note (financing that the seller leaves in the transaction) may sit alongside the SBA loan. Depending on its structure, it may count toward the buyer’s required equity injection, meaning the buyer’s contribution to the project.
Our SBA loan process follows seven defined steps: Pre-Screen, Proposal Letter (Term Sheet), Completing Submission, Underwriting, Construction (when applicable), Closing, and Post-Closing and Servicing.
The pre-screen includes a review of three years of business tax returns and interim financial statements on the target business, three years of personal tax returns and Personal Financial Statements for all owners of 20% or more post transaction.
We aim to answer the pre-screen within two to three days. Once an underwriter is assigned, the goal is a credit decision within 10 business days.
At closing, a dedicated closer coordinates the buyer, seller, and both attorneys.
During underwriting, we order the business valuation and the real estate appraisal if real estate is included in the deal. You have the opportunity to pre-order these reports prior to underwriting if you choose to expedite the credit and closing process. Please note, SBA now requires a Quality of Earning report on all business acquisitions with a business purchase price of three million dollars or more. We suggest you have us pre-order that report prior to underwriting as they normally take about 30 days to complete and are needed for underwriting. You will have the opportunity to speak directly with the Credit Underwriter working on your deal to address any questions they have, and you'll work with your Business Loan Specialist to collect any additional documents and information the Underwriter needs to complete their work.
The buyer controls an important part of the timeline; being responsive and providing complete documents keep the file moving efficiently. Pre-ordering all needed third-party reports will expedite both the credit and closing processes on your loan.
How to Use an SBA Loan to Buy a Business
Our SBA loan process follows seven defined steps designed to move your acquisition from initial review through closing and ongoing servicing.
Pre-Screen
For an acquisition, the pre-screen typically includes a review of three years of business tax returns and interim financial statements on the target business, three years of personal tax returns and personal financial statements on all owners 20% or more post transaction. Our goal is to provide a pre-screen response in two to three days.
Proposal Letter (Term Sheet)
If the opportunity meets initial requirements, we provide a proposal outlining the loan structure, terms, and next steps.
Complete Submission
Once the proposal is accepted, the full loan package is assembled and submitted. Complete and accurate documentation helps keep the process moving efficiently.
Underwriting
During underwriting, we order the business valuation and work through any remaining questions or requirements. Once an underwriter is assigned, the goal is a credit decision within 10 business days.*
Construction (When Applicable)
Projects involving construction, renovations, or improvements move through an additional construction phase before funding is finalized.
Closing
A dedicated closer coordinates the buyer, seller, and both attorneys to satisfy final requirements, prepare documentation, and complete the transaction.
Post-Closing & Servicing
After closing, the loan transitions to servicing, where our team supports ongoing relationship management and loan administration throughout the life of the financing.
The Buyer Controls an Important Part of the Timeline
Being responsive and providing complete documents keep the file moving efficiently. Pre-ordering all needed third-party reports will expedite both the credit and closing processes on your loan.
*Goal begins once an underwriter is assigned.
An acquisition can take several forms. The SBA 7(a) financing structure changes with the deal, but each begins with understanding what you are buying and why.
A departing partner creates a related transaction with its own financing considerations. Explore partner buyout financing.
You are acquiring an existing business with the franchisor involved in the transaction. Explore franchise financing.
Buying a competitor or second location can make the acquisition part of a broader growth strategy. Explore a business expansion loan.
An SBA Express loan can accompany the 7(a) acquisition as a companion facility when the transaction calls for additional flexibility.
Both financing options can help fund a business acquisition, but the structure, cash requirements, and ongoing obligations can be very different. The comparison below highlights several of the factors business buyers commonly evaluate when considering SBA financing versus a conventional loan.
| SBA Acquisition Loan | Conventional Loan Purchase | |
|---|---|---|
| Cash at Closing | Up to about 90% of Total Project Cost financed; SBA loan rates are structured separately from the cash requirement. | Roughly 25% down, plus fees and closing costs paid out of pocket |
| Loan Term | 10 to 25 years, fully amortizing | Typically shorter |
| Covenants | No loan covenants | May include financial covenants |
| Cash at Closing | Up to about 90% of Total Project Cost financed; SBA loan rates are structured separately from the cash requirement. |
|---|---|
| Loan Term | 10 to 25 years, fully amortizing |
| Covenants | No loan covenants |
| Cash at Closing | Roughly 25% down, plus fees and closing costs paid out of pocket |
|---|---|
| Loan Term | Typically shorter |
| Covenants | May include financial covenants |
The primary difference is often how much cash you have left in the business after closing, giving an SBA structure more room to preserve working capital.
Let’s talk through the deal, the financing, and what needs to happen next.
Get started today and our team can help evaluate your acquisition opportunity, discuss available financing structures, and determine the next steps for moving your transaction forward.
At TowneBank SBA Lending, we work with first-time buyers, operators acquiring competitors, professionals buying practices, and franchisees buying resales in a wide variety of industries and business types.
Business brokers frequently introduce acquisition opportunities and rely on experienced SBA lenders to help keep transactions moving toward closing.
Many of our borrowers work with Loan Brokers to help them prepare the financing process, who then refer the deal to TowneBank SBA Lending.
CPAs often connect clients with acquisition financing options while helping evaluate the financial aspects of a transaction.
Transaction attorneys frequently refer buyers seeking SBA financing for business acquisitions, ownership transitions, and partner buyouts.
Since our division offers no deposit accounts, lines of credit, or merchant services, referral partners can introduce their clients without a cross-sell threat to the relationship.
Questions About Using an SBA Loan to Buy a Business
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Up to about 90% of Total Project Cost may be financed, so your equity injection may be substantially less than a conventional 25% down payment.
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A seller note may count toward your equity injection depending on its structure and SBA requirements. We can explain how your proposed note would be treated.
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Approval is cash-flow based, while collateral still matters. SBA rules require personal-asset consideration for owners holding 20% or more when business assets fall short.
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Our goal is a pre-screen answer in two to three days and a credit decision within 10 business days after your complete file receives an underwriting assignment, with closing timing varying.
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Not necessarily. Underwriting considers your experience, the business’s cash flow, credit, management capability, transaction structure, and overall ability to support the debt.
Whether you're evaluating a business acquisition, partner buyout, franchise resale, or expansion opportunity, our SBA Lending team is here to help. Complete the form below and we'll discuss your deal, financing options, and the next steps for moving your transaction forward.
Some applications may require further consideration, and additional information may be required.
Credit terms are subject to approval.
Amount of Credit is subject to SBA program.