Question 1

What Is a Business Acquisition Loan?

Accepted Answer

As the name suggests, a business acquisition loan is a loan issued by a small business lender that helps cover the cost of buying an existing business or franchise. This doesn't just mean buying out the existing ownership or purchasing a business outright — you can also use this type of loan to buy things like equipment for a business or to buy out partners in your own business.   Essentially, a business acquisition loan allows you the freedom to grow your business when you don't have the available funds to do it on your own. Loans backed by the Small Business Administration (SBA) — known as SBA 7(a) loans — can be valued up to $5 million for entrepreneurs who meet the requirements.

Question 2

Why Apply for a Business Acquisition Loan?

Accepted Answer

There are several advantages to buying an existing business rather than starting your own or opening a new location.   It's easier to get funding when you're acquiring an established business. There's less risk for lenders to finance acquisitions because the business being purchased already exists. It can be a shorter and simpler process than getting a startup funded or even opening a new location from scratch.   Buying an existing business can be a responsible growth strategy. If you're looking to buy out a retiring owner of a competing business, for example, you can go into operating a new location with confidence that you'll be able to expand into a viable market. There's always a risk with starting a new business or building a brand-new location. The costs are higher and there are more unknowns to contend with. When you purchase an existing business, you'll already have insights into the performance and effective strategies for success.   However, while buying an existing business is typically less of a risky investment than starting from scratch, it can be a difficult proposition for a small business owner to come up with the funds needed to do this without assistance. Business acquisition loans are a great option for successful small business owners to expand their footprint or otherwise get into the market faster.

Question 3

Who Is Able to Offer Business Acquisition Loans?

Accepted Answer

There are Preferred Lending Partners (PLPs) across the country that meet certain criteria laid out by the SBA. Because business acquisitions tend to carry less risk than building a new business, there are caps on interest rates for these loans, which encourage small business owners and entrepreneurs to participate when it makes sense for their business.   At American Business Capital, we only work with SBA PLPs to facilitate loans on terms that work for you and your needs, because we realize the importance of being able to trust every party involved with major decisions such as these.

Question 4

What Do You Need to Be Eligible for a Business Acquisition Loan?

Accepted Answer

When you choose American Business Capital to help you with your loan, we'll handle the fine details for you — no headaches, no guesses, and virtually nothing standing in the way of you and your business goals. In order to be approved for a business acquisition loan in the first place, though, you have to meet some requirements.   1. You need to have good credit (both personal and business). Like any loan or financing plan, you won't be approved unless you have a track record of financial responsibility, shown by your credit score. Lenders may also look at your business's financial history, including bankruptcies and previous loans.   2. You need to have a demonstrated need for the loan. This may seem obvious, but before you apply for a business acquisition loan, make sure you talk to an expert about whether your application fits the scope of what these loans are designated for.   3. You need to show sufficient cash flow in your business to make the lender confident about your ability to repay. Just because these loans are for entrepreneurs who may need more financial help to take an acquisition over the finish line doesn't mean you won't have to demonstrate your ability to cover your investment over the repayment period.   Need help? Experts at American Business Capital are standing by to answer all your questions!

Question 5

Why Should You Choose American Business Capital for Your Business Acquisition Loan?

Accepted Answer

Countless entrepreneurs trust us when it comes to securing financing for a variety of needs, and it's not a secret why. We're a small business just like the clients we serve. We're a proud, service-disabled, veteran-owned business that puts as much care into everything we do for you as you deserve.   When it comes to business acquisition loans, we have a track record of reliable success. Every day, we facilitate loans of between $350,000 to $5,000,000 and we do it partnering with reputable, SBA-backed lenders.

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