Buy the business instead of building it from zero.
Financing built to buy a business rather than build one — an existing customer base, cash flow, and team, priced against a valuation instead of a construction budget. SBA 7(a) dominates this category for a reason.
At a glance
Amount
$150,000 – $5,000,000+ (SBA 7(a)); smaller deals via conventional or seller financing
Term
Up to 10 years (working-capital/goodwill component); up to 25 years if real estate is part of the deal
Pricing
Roughly Prime + 6% (loans $150K–$250K) down to Prime + 3.0% (loans over $350,000 with 7+ year terms) on SBA 7(a) acquisition loans (variable; check current rates at sba.gov)
Time to fund
45 – 90 days from signed LOI to close (30 – 60 at a Preferred Lender with a clean file)
Qualifications
680+ buyer FICO, relevant industry or management experience, target business profitable trailing 2–3 years, typically 10%+ buyer equity injection
| Typical amount | $150,000 – $5M SBA 7(a); smaller deals available via conventional or seller financing (products.ts states "$5,000,000+") |
|---|---|
| Rate | Roughly Prime + 6% (loans $150K–$250K) down to Prime + 3.0% (loans over $350,000 with 7+ year terms) on SBA 7(a) acquisition loans (variable) |
| Term | Up to 10 years (working-capital/goodwill); up to 25 years if real estate is part of the deal |
| Funding speed | 45 – 90 days from signed LOI to close (30 – 60 at a Preferred Lender) |
| Best for | Buy the business instead of building it from zero. |
Heuristic approval-likelihood estimate per product based on your business profile — no hard credit pull, no commitment, takes 10 seconds. Final approval is the lender's decision after underwriting your full file. Estimates below are shown as Approval Likelihood by Product.
See your Business Acquisition Loan options in one application
Soft credit pull to see options · matched to your best-fit funding partners
Files at or above these thresholds typically have the broadest lender access. Below doesn't mean declined — the lender decides on the full file.
| Product | FICO | Time in business | Revenue |
|---|---|---|---|
| Business Acquisition Loan | 680+ | N/A — finances buying an existing business | Target business profitable trailing 2-3 years |
Network-typical document requirements. Faster files have these ready on Day One.
Business Acquisition Loan
Lender-specific stipulations may add to this list. Have the required items ready at intake to start the underwriting clock.
$850,000 total purchase price, 10% buyer equity injection, $765,000 SBA 7(a) loan, 10-year term, Prime + 3.0% (illustrative Prime = 6.75% → 9.75% total)
Why this matters: Confirm current Prime at federalreserve.gov/releases/h15/ before relying on any specific payment number — Prime moves and SBA rate caps reset against it.
Independent business valuation
Deals where the intangible/goodwill portion exceeds $250,000 require an independent appraisal from a credentialed business appraiser under current SBA lender policy — the sale price can't exceed the appraised value.
Target's trailing cash flow (DSCR)
Lenders model the acquired business's historical cash flow against the new debt service — 1.15–1.25x+ coverage is the typical bank-tier floor.
Buyer's relevant experience
Industry or management experience in the target's line of business meaningfully strengthens the file — inexperienced buyers face more scrutiny or a negotiated transition period with the seller.
Owner FICO + equity injection
680+ FICO is the typical SBA floor; the equity injection (commonly 10% of total project cost) can sometimes be partly met with a seller note on full standby.
Illustrative scenarios drawn from the lender partner network — not specific customer data. Your actual options depend on your file.
Midwest HVAC contractor buying a competitor, 8 years industry experience
Situation
$650,000 to acquire a retiring competitor's customer book and two service trucks.
Typical match
SBA 7(a) acquisition loan with a portion of the purchase price structured as a seller note on standby, counted toward the equity injection.
Speed
Approval in 5 weeks; closed in 68 days from signed LOI.
Illustrative — not specific applicant data
First-time buyer acquiring a Southeast auto repair shop, prior shop-manager experience
Situation
$425,000 purchase price for an established two-bay shop with 12 years of financials.
Typical match
SBA 7(a) with a 90-day seller transition period written into the purchase agreement to offset the buyer's first-time-owner status.
Speed
60 days from application to close at a Preferred Lender.
Illustrative — not specific applicant data
Regional dental group acquiring a third practice, established multi-location operator
Situation
$1.4M practice acquisition — patient list, equipment, and leasehold improvements.
Typical match
SBA 7(a) with an independent business valuation (deal exceeded the $250K in-house-valuation threshold) and a real-estate-inclusive structure for the leasehold buildout.
Speed
75 days from LOI to funded close.
Illustrative — not specific applicant data
Three steps from application to funded. ClearValue Lending handles intake + matching; the funding partners make the offer and funds.
Lenders need 2–3 years of the target business's tax returns and financials, plus a signed LOI or purchase agreement, before underwriting starts.
The lender orders a business valuation (independent appraisal above the $250K goodwill threshold), models DSCR on trailing cash flow, and underwrites the buyer's credit and experience.
The buyer wires the equity injection, any seller note gets executed, and the loan funds at closing — typically 45–90 days from LOI to close.
Under current SBA lender policy (effective June 1, 2025), if the intangible/goodwill portion of the deal — the amount financed minus the appraised value of real estate and equipment — is $250,000 or less, the lender can value the business in-house. Above $250,000, or when buyer and seller are related parties, the lender must commission an independent business appraisal from a qualified, credentialed appraiser, and the sale price can't exceed that appraised value.
A seller note on full standby (no principal or interest payments) for the life of the SBA loan can count toward a portion of the required equity injection, under conditions specified in SBA policy — a common structure that lets a buyer close a deal with less cash up front while giving the seller ongoing exposure to the business's success. Earn-outs (deferred purchase-price payments tied to post-close performance) are a separate structure some deals use to bridge a valuation gap between buyer and seller.
Lenders underwrite the buyer as much as the deal. Industry or management experience relevant to the target business meaningfully strengthens a file; buyers without it aren't automatically disqualified but often need a negotiated transition period where the seller stays on to train the new owner and reduce operational risk.
Three things matter most before you sign: whether the deal is structured as an asset purchase or a stock purchase (asset purchases are more common in SMB deals and require an IRS-filed allocation of the purchase price across asset classes), whether the target's post-close working capital is adequate to run the business day one, and whether the seller's non-compete and transition-period terms actually protect the customer relationships you're paying for.
SBA + tax-treatment sources
The Combat-or-Compound Check
Combats when
Buying an existing, profitable business with 2–3 years of trailing cash flow that supports the new debt service on a DSCR basis, especially when a seller note on standby can offset part of the required 10% equity injection.
Compounds when
A time-sensitive deal that can't absorb the 45–90 day close timeline, or a buyer with no relevant industry experience and no negotiated seller-transition period to offset that risk.
Verdict: SBA 7(a) dominates this category because the federal guarantee lets banks underwrite against goodwill and cash flow a conventional lender won't touch on its own — but that same structure means the deal lives or dies on the target's DSCR, not just the buyer's credit.
Scored against ClearValue's published methodology, drawn from the sourced claims on this page.
From traditional bank loans to alternative capital, this guide walks through every major small business financing option in 2026 and when each one makes sense.
Read guide →What underwriters actually weigh — beyond the headline FICO and revenue numbers — and the qualitative factors that tip close decisions.
Read guide →What loan can you use to buy or acquire a business?
An SBA 7(a) loan is the most common and best-fit financing for buying an existing business: it offers long terms, competitive rates, and is widely used for business acquisitions and partner buyouts. Conventional acquisition loans and seller financing can supplement or substitute. Lenders underwrite the target's cash flow (debt-service coverage) heavily — the acquired business must support the loan.
What's the difference between a business loan for an acquisition versus a startup?
Acquisition financing and startup financing follow separate SBA eligibility paths, different valuation requirements, and different equity-injection rules. Acquisitions have an existing cash flow history to underwrite; startups must substitute owner equity, projections, and business plan quality instead.
How do you finance buying an existing veterinary practice?
Buying an existing veterinary practice is financed primarily through SBA 7(a) loans -- the only widely available product that finances the goodwill component (client relationships, appointment volume, staff continuity) that represents 60--80% of most veterinary practice purchase prices. Corporate consolidators (Mars, NVA) have compressed independent practice supply, making SBA-backed acquisition financing increasingly critical for DVM buyers competing against institutional buyers.
How do you finance the purchase of an existing dental practice?
Buying an existing dental practice — typically $500K–$2M including goodwill — is primarily financed through SBA 7(a) loans, which are specifically designed to fund goodwill-heavy acquisitions that conventional bank loans won't underwrite. SBA 7(a) covers up to 90% of the purchase price including goodwill, with 10-year repayment terms.
How do you finance the purchase of an existing auto repair shop?
Buying an existing auto repair shop — typically valued at 1–2x annual revenue including equipment and customer base — is primarily financed through SBA 7(a) loans, which are structured to fund goodwill-inclusive acquisitions that conventional bank loans won't underwrite. SBA 7(a) covers up to 90% of the purchase price including goodwill, with 10-year repayment terms.
~5 minutes to apply, no hard credit pull at pre-qualification, no commitment. We'll route your file to the funding partners most likely to fund based on your specific situation.
Editorial disclaimer: This page is for educational purposes and is not financial, legal, or tax advice. Rates, fees, qualification requirements, and product availability are illustrative ranges that vary by lender, market conditions, and individual business profile. ClearValue Lending is a funding platform; all financing is subject to lender partner approval and terms. Actual approval, amount, and pricing depend on lender review. Always read your contract end to end and verify specific numbers before signing. ClearValue Lending is compensated by the funding lender on closed transactions.
https://clearvaluelending.com/business-loans/business-acquisition-loan
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