Business Acquisition Loans
Fiscus Capital Funding offers small business financing solutions tailored to each business’s unique needs, including business acquisition loans.
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Business acquisition loans are useful commercial financing options for borrowers looking to purchase an existing business or open a franchise. Fiscus Capital Funding offers small business financing solutions tailored to each business’s unique needs, including business acquisition loans. Our team is here to put our years of experience to work to help ensure you receive the best terms possible. Learn more about business acquisition loans to find out if this type of commercial financing is right for you.
What Is A Business Acquisition Loan
Business acquisition loans exist to help borrowers obtain the necessary funds to purchase an existing business or open a franchise location. This type of loan helps bridge the gap between what it would normally cost to start up a new business and the extra up-front working capital required to buy an existing business.
Types Of Business Acquisition Loans
There are several different types of business acquisition loans you can choose from. These include:
- SBA (Small Business Association) – Loans where the requirements are usually strict, and the interest rates are capped at a certain percentage over the prime lending rate
- Term Loans – Term lengths range from 1-5 years and may require collateral, but typically have better interest rates than other types of business acquisition loans
- Startup Loans – These loans vary from business to business, as each startup is unique
- Business Lines of Credit – Revolving credit lines to be used when needed.
- Revenue-Based Loans – These loans are set to fluctuate based on revenue rather than payments
Benefits Of Business Acquisition Loans
There are some notable benefits to a business acquisition loan, and the benefits can vary depending on which type of business acquisition loan is right for you. One of the pros is the ability to purchase an existing business at any time. Because the amount of capital needed to purchase an existing business is often higher than that of a startup, business acquisition loans help allow borrowers to have the funds on hand to buy when the time is right for them. Another benefit is this type of loan allows for the funding of any type of business, increasing your means for business expansion. Additionally, the funds from these loans are typically made available to the borrower within a matter of days, which gives you the ability to make your purchase quickly.
Qualifying For A
Business Acquisition Loan
Each type of business acquisition loan has its own unique set of qualifications. However, there are some common factors that lenders typically look for when a borrower is applying for one of these loans. Some of these standard qualifications include, but are not limited to:
- Business & Personal Credit – Good credit is usually necessary for these loans. The lenders will first look at your business’s credit history, but if no long-term business credit history exists, your personal credit score will become an important factor in whether or not you qualify for a loan.
- Tax Returns – Both your business and personal tax returns will also play an important role in qualifying you for a loan. Your tax returns will give lenders a chance to verify your business’s revenue as well as your income. 3 years of returns is preferable, but if you do not have them, providing detailed financial statements can serve as an acceptable substitute.
- Financial Statements – Lenders will want to ensure that your business can maintain a sufficient bank balance prior to approving a loan. You should be prepared to produce your balance sheet, profit and loss statements, and cash flow statements.
- Down Payment – Many lenders may require a down payment of 10-15% of the total transaction amount.
Business Acquisition Loan Requirements
Financial institutions consider a broad range of factors when reviewing business acquisition loan applications, regardless of the loan types. Borrowers should familiarize themselves with the financial institution’s loan options and specific requirements.
Being prepared in advance and having all necessary documentation on hand can make the loan process less stressful. The following is some of the information to have available:
- Two to three years’ worth of business and personal bank statements
- Business and personal credit reports and scores.
- The previous three years’ business and personal tax returns
- A current 2-3 years of financial documentation showing balance sheet, profit and loss statement, and cash flow statement for the business to be acquired
- A business plan
- Post-acquisition sales projections
- An estimate of the current debt service coverage ratio
Choose Fiscus Capital Funding For All Your Commercial Loan Needs
When looking for business capital solutions, it’s important to make sure you’re working with the right lender who can explain your loan to you and negotiate the best funding terms. At Fiscus Capital Funding, we work with your company to understand its needs and provide business lending solutions that will position you for future financial success. To help our clients make the best choice for themselves, we work to demystify the industry and educate them about the small business funding options that are available.
Give us a call to speak to one of our professionals and talk about any of our various funding services available to business owners and real estate investors.
Talk To Our Specialists Now
Fiscus Capital Funding provides a variety of commercial finance products to help small businesses succeed. We offer accounts receivable financing, merchant cash advance services, term loans, and much more. To apply for financing or learn more about your options, please contact one of our certified financial specialists.
As a small business owner, you should understand the importance of working capital to keep your operations running smoothly. However, securing funding can be a
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