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Best Business Acquisition Loans of April 2024

By Randa Kriss
Last updated on March 14, 2024
Edited bySally Lauckner
✅Fact checked and reviewed

⏰ Estimated read time: 9 minutes

A business acquisition loan helps you purchase an existing business and is often available through traditional banks, credit unions and online lenders.

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A business acquisition loan allows you to finance the purchase of an existing business or franchise. You can also use this type of small-business loan to acquire specific assets from an existing company, such as equipment, or to buy out partners in your current business.
Business acquisition loans, including SBA 7(a) and Express loans, are offered by banks, credit unions and online lenders. If you have poor credit or limited experience as a small-business owner, getting a loan to buy a business may be difficult.
Below, you’ll find our picks for the best business acquisition loans and more information on how to qualify for financing.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 7 business acquisition loan options

LenderNerdWallet Rating▼Max loan amount▼Min. credit score▼Next steps

SBA 7(a) loan

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Best for SBA business acquisition loans

$5,000,000650

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SBA Express loan

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Best for Fast SBA business acquisition loans

$500,000650

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Funding Circle - Online term loan

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4.5/5

Best for Online business acquisition loans

$500,000660

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Triton Capital - Equipment financing

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4.0/5

Best for Business acquisition loans for equipment

$250,000575

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OnDeck - Online term loan

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5.0/5

Best for Business acquisition loans for expanding an existing business

$250,000625

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National Funding - Online Term Loan

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4.0/5

Best for Business acquisition loans with expanded credit qualification

$500,000600

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TAB Bank - Term loan

Best for Bank small-business acquisition loans

$300,000660

Here are 7 business acquisition loan options

Best for SBA business acquisition loans

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Fast SBA business acquisition loans

U.S. Small Business Administration

Max Amount

$500,000

Min. Credit Score

650

Best for Online business acquisition loans

Funding Circle

Max Amount

$500,000

Min. Credit Score

660

Best for Business acquisition loans for equipment

Triton Capital

Max Amount

$250,000

Min. Credit Score

575

Best for Business acquisition loans for expanding an existing business

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for Business acquisition loans with expanded credit qualification

National Funding

Max Amount

$500,000

Min. Credit Score

600

Best for Bank small-business acquisition loans

TAB Bank

Max Amount

$300,000

Min. Credit Score

660

I'M INTERESTED IN:

Our pick for

SBA business acquisition loans

SBA 7(a) loans offer competitive rates and terms and maximum loan limits of up to $5 million. They can be a good option when you don’t meet bank eligibility requirements but still have good credit and strong finances.

SBA 7(a) loan

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Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Lowest interest rate

Max loan

$5,000,000

Min. Credit score

650

Apr range

11.50-15.00%

7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.

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Our pick for

Fast SBA business acquisition loans

SBA Express loans can typically offer faster approval times along with the same basic features as 7(a) loans — as long as the funding amount does not exceed the $500,000 maximum loan limit.

SBA Express loan

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Max Loan Amount
$500,000
Min. credit score
650
Est. APR
11.50-15.00%
SBA Express loans are available in amounts up to $500,000 as either a term loan or line of credit. These loans typically fund faster than standard 7(a) loans.

Max loan

$500,000

Min. Credit score

650

Apr range

11.50-15.00%

SBA Express loans are available in amounts up to $500,000 as either a term loan or line of credit. These loans typically fund faster than standard 7(a) loans.

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Our pick for

Online business acquisition loans

Funding Circle term loans can be used for growth and expansion, as long as your business has been in operation for a minimum of two years.

Funding Circle - Online term loan

4.5
NerdWallet rating 

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Max Loan Amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly
4.5
NerdWallet rating 

Max loan

$500,000

Min. Credit score

660

Apr range

15.22-45.00%

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.

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Our pick for

Business acquisition loans for equipment

Triton Capital offers equipment financing with flexible payment options of monthly, quarterly, annually, semi-annually or seasonally.

Triton Capital - Equipment financing

4.0
NerdWallet rating 

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Max Loan Amount
$250,000
Min. credit score
575
Est. APR
5.99-34.99%
Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.
4.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

575

Apr range

5.99-34.99%

Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.

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Our pick for

Business acquisition loans for expanding an existing business

Term loans up to $250,000 are offered by OnDeck to business owners who want to expand their establishment and have a minimum credit score of 625.

OnDeck - Online term loan

5.0
NerdWallet rating 

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
5.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

625

Apr range

27.20-99.90%

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

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Our pick for

Business acquisition loans with expanded credit qualification

National Funding offers term loans up to $500,000 that can be used for any business purpose and a flexible minimum credit score requirement of 600.

National Funding - Online Term Loan

4.0
NerdWallet rating 

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Max Loan Amount
$500,000
Min. credit score
600
Borrowers who can't qualify for more traditional loan options might consider National Funding for fast access to capital.
4.0
NerdWallet rating 

Max loan

$500,000

Min. Credit score

600

Borrowers who can't qualify for more traditional loan options might consider National Funding for fast access to capital.

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Our pick for

Bank small-business acquisition loans

TAB Bank offers term loans ranging in size from $30,000 to $300,000 with competitive interest rates and an online prequalification process.

TAB Bank - Term loan

Max Loan Amount
$300,000
Min. credit score
660
Est. APR
8.99-35.99%
TAB Bank offers competitive interest rates for business owners with strong credit — and can sometimes fund faster than an SBA loan.

Max loan

$300,000

Min. Credit score

660

Apr range

8.99-35.99%

TAB Bank offers competitive interest rates for business owners with strong credit — and can sometimes fund faster than an SBA loan.

How Much Do You Need?

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What is a business acquisition loan?

A business acquisition loan is used to purchase a business, which may include buying an existing business, becoming a franchise owner, buying out a business partner or purchasing the business assets of another company. The lender determines how the funds from a business acquisition loan can be used.
Banks, credit unions, online lenders and community lenders offer loans, including SBA loans, that can be used for business acquisition purposes. For example, you can use an SBA 7(a) loan to buy a business or increase your ownership share in your existing business.

How do business acquisition loans work?

Business acquisition loans are typically structured as term loans, in which you repay the borrowed funds, with interest, over a set period of time. Loan amounts, interest rates and repayment terms vary by lender.
Although you may ask for a specific loan amount, some lenders will offer you only a percentage of funding — and require that you supply the remaining percentage as a down payment. Down payments on business acquisition loans can be as little as 10% or as much as 30% or more depending on the type of financing, lender and your business’s qualifications.
Lenders typically rely on a business valuation — an evaluation of the economic value of the company you’re looking to buy — among other factors, when determining the loan amount to offer. These valuations are often done by independent third parties who use business assets, future earnings and current market value among other factors to get a fair assessment of what the business is worth.
Collateral may also be required to secure your financing. In some cases, tangible assets from the company you’re looking to purchase can serve as collateral on the loan.
Lenders will often ask to see a signed letter of intent that spells out the terms of the sale of the business such as the purchase price, what assets are included in the sale and any liabilities that the new owner will take on. If you are concerned about making an offer before you have a loan, a clause can be included in the letter that states your offer is contingent on you getting financing.

Business acquisition loan requirements

Like other types of financing, the business loan requirements for acquisition loans will vary depending on the lender. However, good personal and business credit scores, applicable business experience and a strong business plan can be helpful.
In addition to your own financial information, you’ll also be asked to provide information about the business you want to purchase.
Documents often required for a business acquisition loan:
  • Business valuation.
  • Letter of intent.
  • Sales agreement.
  • Franchise agreement, if applicable.
  • Business financial statements.
  • Business tax returns.
  • Contracts and leases.

Pros and cons of a business acquisition loan

Pros

  • Lessens the upfront costs associated with your acquisition. Instead of relying exclusively on your existing capital reserves or personal savings, a business acquisition loan can help cover some of the costs associated with purchasing another company.
  • Collateral requirements may be flexible. Some acquisition loans may not require collateral. SBA 7(a) loans, for example, don’t require collateral for loan amounts under $25,000. In addition, equipment financing doesn’t typically require collateral because the equipment serves as collateral on the loan.
  • Loan process can move faster than a traditional loan. Because of the preparation required for a business acquisition, by the time you sit down with a lender, the actual loan application process can go fairly quickly.
» MORE: How to get a business loan without collateral

Cons

  • Can be hard to qualify. Because you’re looking for a loan to purchase another company, lenders want to see that you are reliable and experienced and have the ability to repay your debts. As a result, they often require that you have good credit, strong finances and an established business background. However, some lenders may be willing to work with borrowers with bad credit, but they’ll also charge higher interest rates.
  • Interest costs may affect your bottom line. A business acquisition loan can cover the costs of purchasing and running another company, but you’ll also be making repayments, which includes interest. The interest cost on loans with high interest rates can affect your cash flow and monthly budget.
  • May require a down payment. You may be asked for a down payment on acquisition loans ranging from 10% to 30% or more depending on the lender and the loan amount. This can differ from other business loans and even some startup loans, which may not require a down payment.

Where to get a business acquisition loan

Business acquisition loans are available from a variety of sources, including:

Banks and credit unions

Banks and credit unions can offer acquisition loans with low interest rates and long terms for businesses that can qualify and don’t need cash fast.
To qualify for a business bank loan, you’ll typically need strong personal credit (a score of 700 and up), several years in business and excellent finances. Not all banks or credit unions require physical collateral, but offering this type of security may help you access larger loan amounts and lower interest rates.
However, these small-business loans can be slow to fund and often require lengthy application processes.

SBA lenders

SBA loans are issued by participating lenders, usually banks and credit unions, and are partially guaranteed by the U.S. Small Business Administration. These loans have flexible terms and low interest rates and can be used for various types of business acquisitions. However, like traditional bank loans, SBA loans have strict requirements and can be slow to fund.
To qualify for an SBA loan, you’ll typically need strong annual revenue, at least two years in business and a personal credit score of 690 or higher — although some SBA lenders may have lower credit score requirements.
You’ll also likely need to provide a down payment of at least 10% of the total loan amount when using an SBA loan for a business acquisition. In some cases, you may need to provide additional collateral.
Standard SBA 7(a) loans can take 30 days to a few months to fund. As an alternative, SBA Express loans offer a faster funding time, but they also have smaller loan amounts and slightly higher interest rates.

Online lenders

If you need funding faster — or don’t qualify for an SBA or bank loan — consider a business acquisition loan from an online lender. Online lenders such as Funding Circle offer acquisition loans in amounts up to $500,000 and terms up to seven years.
Online lenders generally have less strict requirements compared with banks and credit unions. You may be able to qualify for a business loan with fair credit (a FICO score of 630 to 689), and you may not be required to provide physical collateral. Online lenders may also be more likely to work with startups, especially if they have strong finances.
And whereas bank and SBA loans may take weeks to fund, online business loans can often be funded in a few days. However, online lenders typically charge higher annual percentage rates (APRs) than traditional lenders — the tradeoff for easier approvals and speed.
» MORE: How to get a loan to buy a business

How to get a business acquisition loan

The process of applying for a business loan to acquire a business is similar to that of applying for other types of business loans.
  • Determine if you qualify for the business loan.
  • Compare lender offers.
  • Gather your application information based on lender requirements.
  • Apply for the loan online or in person, depending on the lender.
  • Review your loan agreement.
  • Receive funding.

Alternative options for business acquisition financing

If you’re looking to buy a business, you may have funding options outside of traditional term loans, such as:

Seller financing

With seller financing, you’re borrowing the capital you need to purchase the business directly from the current owner. You work with the owner to create an agreement regarding terms and interest and then repay the owner directly.

Equipment financing

If your business acquisition includes equipment, you might use an equipment loan to finance part of your purchase. Or if you’re buying a business that relies heavily on equipment, such as a construction business, you may be able to find an equipment loan to cover a majority of the costs. With equipment financing, the equipment typically serves as collateral on the loan.
» MORE: How to finance a business purchase

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on March 14, 2024

Methodology

NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including: transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to business credit bureaus and responsible lending practices. We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.

Wondering if you qualify?

It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.

Learn more

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