• Mon, Aug 16, 2021
  • How to Finance an Acquisition Using an SBA Loan
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  • Click here for a link to the full article by Andrew Gazdecki, published in Entrepreneur on November 3, 2020.

    If you want to buy another business, don’t let a lack of capital hold you back. You’re unlikely to land on that killer idea the first time, so serial entrepreneurship is your best chance of success.  When you spot a business for sale that would thrive under your leadership, but your funds are tied up in your current company, consider an SBA (Small Business Administration) loan to finance the acquisition. 

    Hang on – what’s the SBA?

    The SBA is a federal agency that helps small businesses get loans. It doesn't issue loans itself, but it works with lenders to overcome obstacles to business lending, such as guaranteeing loans, reducing risk and sourcing capital. On a deeper level, the SBA funds, licenses and regulates investment funds that in turn lend to small businesses. 

    Why finance an acquisition with the SBA?

    • Better rates
    • Better terms
    • Help and support

    How to get an SBA loan to finance an acquisition

    The general-use 7(a) loan is the SBA’s most popular, and it's ideal as acquisition finance. You can borrow up to $5 million which is more than enough for acquisitions of small or even medium-sized businesses. You can only borrow what you can afford to repay, however, which an SBA-approved lender will determine when you apply.

    To begin applying for an SBA loan, you first need a list of SBA-approved lenders in your area. 

    Next step is to apply, the specifics of which will vary from lender to lender... The SBA and the lender will assess your application and return with a decision. 

    Some things to remember

    • Plan early as getting an SBA loan takes time
    • 7(a) interest rates are variable
    • Negotiate, negotiate, negotiate

    SBA loans are one of the best forms of credit available. The interest rates are low, and the repayment terms are fair. If you already own a business and are eyeing up another, don’t fret if you don’t have the capital to finance the acquisition. The SBA can help you seal the deal. 


    Please contact me if you are interested in buying a business. 

    Steve Niehaus, MBA, CBI, CM&AP

    [email protected]