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Acquisition Funding

If you can last the long application wait time, business acquisition financing may supply you with funds to buy a business, franchise, or asset.

Acquisition Funding

Business acquisition funding can provide you with capital to purchase a business, franchise, or asset. Your company’s assets will be used as collateral. The interest rate is typically lower for this type of funding than other small business funding options.

Acquisition Funding at a Glance

Before you’re qualified for acquisition funding, the provider will look at:

  • The value of your company. The provider will want to make sure you aren’t purchasing a business that is worth substantially more than the business you already have.
  • Your experience as a business owner. The lender will want to make sure you know how to run a company. To determine this, they will look at how you have performed at your own company.
  • The performance of your company. Your business should be stable. If your company has been losing money, then the lender will be less likely to approve you for funding.

The SBA 7(a) loan can sometimes be used for acquisition funding. This can be an ideal solution for eligible companies because SBA loans tend to have lower interest rates.

Main Advantages

The main advantage of acquisition funding is the low interest rate. This interest rate is low when compared to other types of small business funding options. Please note that your rate will be unique to you. You should compare it to rates that are similar to other business acquisition funding options, like the SBA 7(a) loan we mentioned earlier.

Disadvantages

One of the biggest disadvantages of acquisition financing is how long it takes to get your funding. The provider can take up to nine months to review your application and make a final decision. A lot can happen in nine months and the investment opportunity might have passed by then.

Acquisition Funding Wrap-Up

If you are thinking about applying for acquisition funding, you should apply as early as you can. The long wait time can be prohibitive to many types of investments, so it’s best to get the application in sooner rather than later. During the months it’ll likely take to get a decision from the provider, you may need to investigate alternative funding sources that can get you the money faster.

Is this financial product right for you?

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