A business acquisition loan is financing earmarked for expanding or acquiring an existing business. You may use the funds to buy out a partner or purchase a franchise. Or use the money for a new business startup or working capital during your expansion.

What Are The Advantages And Disadvantages of Business Acquisition Loans?

Advantages

Some lenders don’t require collateral. Approval can be a lengthy process or take less than 24 hours. Loans may be short-term or long-term.

Disadvantages

A favorable business cash flow and a high score on your credit are needed to qualify for non-collateralized loans. Interest rates may be steep. You may have to meet additional restrictions or stipulations before using the funds.

What Are The Kinds Of Business Acquisition Loans?

SBA

Many business owners choose Small Business Administration (SBA) loans. If you qualify, you can borrow up to $50,000 at competitive interest rates. You may take seven or more years to repay, but prepayment fees are charged if you pay the loan off early.

Term

Banks, credit unions, and online lenders offer short-term and long-term loans. You receive the agreed-upon amount and repay it in monthly installments. You may have to provide collateral or a personal guarantee that you will make the payments if your business can’t.

Startup

Startup loans are used for purchasing franchises or for acquiring another business that isn’t yet successful. They are an option for new entrepreneurs or business owners who can’t meet the years-in-business requirements of other lenders. You may need to meet the other qualifications expected for SBA or term loans. 

Equipment Financing

The equipment provides the collateral for loans. Use it whether you are purchasing new equipment for your business or buying another company’s equipment. It’s not a viable choice for intellectual property or inventory.

Rely on Diamond Capital Financing for the business acquisition loan that meets your unique needs. Whether your business is large or small, we offer options to fit you. Contact us today and get started with a free consultation.