Key takeaways

  • A business acquisition loan is any business loan used to acquire a business
  • Business acquisition loans with high loan amounts and long repayment terms are usually needed to cover the full cost of an acquisition
  • Expect to submit a long list of business financial documentation unless you pick an online lender that streamlines the process

A business acquisition loan has different needs than small business loans used for other purposes. You’ll likely need a business loan with high loan amounts and long repayment terms, giving you a runway to continue growing the business.

But unlike startup business loans, the business may already have years of experience behind it and an established customer base. You can use the business’s financial records to qualify for a variety of business acquisition loans. We rounded up the top six lenders that you can use to finance your business acquisition.

Compare the best lenders for business acquisition loans

Lender Loan type Loan amount Bankrate score
SBA 7(a) loan Up to $5 million 4.8
Lendio Term loans Up to $2 million 4.6
Taycor Financial Equipment financing Up to $2 million 4.2
Bank of America Secured business loan From $25,000 4.3
SMB Compass Alternative business loans Up to $10 million 4.4
Funding Circle Long-term loans $25,000 to $500,000 4.6

Best for high loan amounts


Rating: 4.8 stars out of 5
Learn more in our Bankrate review

Lendio logo
Best for startups


Rating: 4.6 stars out of 5
Learn more in our Bankrate review

Taycor Financial
Best for equipment financing

Taycor Financial

Rating: 4.2 stars out of 5
Learn more in our Bankrate review

Bank of America
Best for secured business loan

Bank of America

Rating: 4.3 stars out of 5
Learn more in our Bankrate review

SMB Compass
Best for established businesses

SMB Compass

Rating: 4.4 stars out of 5
Learn more in our Bankrate review

Funding Circle
Best for flexible repayment terms

Funding Circle

Rating: 4.6 stars out of 5
Learn more in our Bankrate review

What is a business acquisition loan?

A business acquisition loan is a business loan used to buy a small business, small business idea or business franchise. The goal is to finance most or all of the business acquisition through the business loan.

To see if you can get the full funding, you’ll need to apply or prequalify with the lender to see if it will approve you for the full amount. The lender will approve you for a loan amount based on your current finances and business qualifications.

If the loan is partially approved, you may need to work out separate terms to fund the rest of your business acquisition, such as giving the existing ownership a commission.

Bankrate insight
See how much your business loan payments might be using a business loan calculator to estimate costs.

Business acquisition loan requirements

Lenders may require a hefty list of documents to ensure that the business being acquired is stable and able to repay the loan. Those documents include:

  • Bank statements for at least 3 to 6 months
  • Business tax returns for acquired business
  • Business formation documents
  • Proof of ownership
  • Business licenses and permits
  • Business plan
  • Personal bank statements and tax returns
Bankrate insight
You can get a business acquisition loan with bad credit, but you’ll need to find a lender that accepts the credit score you have. These lenders may specialize in bad credit business loans, giving you a higher chance of getting approved. As an alternative, you can wait and build your business credit so that you can qualify for more favorable business loan terms.

How to get a business acquisition loan

Getting a small business acquisition loan works similarly to getting a business loan used for other purposes. The steps to getting a business acquisition loan include:

  1. Compare lenders and the types of business loans they offer.
  2. Apply for business loans with several lenders to see your loan offer. You could also apply for a loan marketplace like Lendio or prequalify with lenders, which gives you a peek at what you could qualify for without finalizing the loan offer.
  3. Compare loan offers, including interest rates and repayment terms
  4. Choose the loan offer that best suits your business.
  5. Receive your business loan in your deposit account.

Bottom line

You can use a variety of business loans to finance your business acquisition, though a term loan is a popular choice for this purpose. Lenders often want to see strong financial records from both the business and the new owner’s personal finances.

But you can find some lenders that loosen requirements, such as allowing fair or bad credit and low revenue. These lenders may be ideal for business owners acquiring a small business.

Frequently asked questions

  • A small business acquisition loan is a business loan used to acquire a small business. You can use nearly any business loan for this purpose. You simply need to state this purpose on the business loan application.
  • It’s rare to find a business acquisition loan that wouldn’t require you to put money down, though it’s not impossible. If you’re financing equipment or securing a loan with large assets, you have a higher chance of getting a business loan with no money down for a down payment.
  • Yes, you can use an SBA loan to acquire a small business. As with all business loans, lenders will focus on whether that business can turn a profit and repay the business loan. You may need financial documentation for the business as well as a solid business plan for growing the business after you acquire it.