Business acquisition financing
Buying a business usually means assembling financing around a negotiated purchase price — and the structure of that financing matters as much as the price itself.
What it is
Acquisition financing is funding used to purchase an existing business. It can come from several structures: a term loan sized to the purchase, an SBA-backed loan, seller financing where the seller accepts payment over time for part of the price, or a combination of these.
Seller financing deserves special attention: the seller acts as a lender for part of the price, which can bridge gaps between the price, the buyer's cash, and what a third-party provider will fund. Its terms are whatever the purchase agreement says they are — there is no standard form.
When businesses typically consider it
Businesses and buyers typically explore acquisition financing when purchasing an existing business, a franchise location, or a partner's share of a business they already operate.
Because acquisitions involve due diligence, negotiation, and often legal review, they rarely align with urgent-funding structures. The timeline is usually measured in weeks or months.
Tradeoffs
- Price vs. structure: A lower price financed expensively can cost more than a higher price on better terms. Evaluate the total you will pay, not just the number on the purchase agreement.
- Seller financing vs. third-party financing: Seller financing can be flexible and fast to negotiate, but it ties you to the seller after closing. Third-party financing creates distance but adds process and documentation.
- The business must carry the payment: The acquired business's cash flow is usually what services the debt. If the payment only works when the business performs better than it historically has, that is a risk you are choosing, not a plan.
What to compare
- Total cost of each financing layer — third-party financing and any seller note
- How the combined payments compare to the business's historical cash flow
- Seller note terms: rate, term, subordination to other financing, and what happens on default
- What the acquisition price includes — assets, inventory, goodwill — and what it excludes
- Personal guarantees and collateral across all layers
What this page cannot know
- Whether the business you are buying is worth the price — that is due diligence, not arithmetic
- What any provider would lend against a specific acquisition
- Whether the historical financials you were shown are accurate — verify them independently
- Anything about your business you have not entered into one of our tools
Run your own numbers
Start with the numbers, not a lender. The tools are free, and nothing you enter leaves your browser.