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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
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
TAB Bank - Term loan | Best for Bank small-business acquisition loans | $300,000 | 660 | |
SBA 7(a) loan with Fundera by NerdWallet | Best for SBA business acquisition loans | $5,000,000 | 650 | with Fundera by NerdWallet |
SBA Express loan with Fundera by NerdWallet | Best for SBA business acquisition loans | $500,000 | 650 | with Fundera by NerdWallet |
Funding Circle - Online term loan with Fundera by NerdWallet | 5.0/5 Best for Online business acquisition loans | $500,000 | 660 | with Fundera by NerdWallet |
Triton Capital - Equipment financing with Fundera by NerdWallet | 4.0/5 Best for Business acquisition loans for equipment | $250,000 | 600 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | 5.0/5 Best for Business acquisition loans for expanding an existing business | $250,000 | 625 | with Fundera by NerdWallet |
National Funding - Online Term Loan with Fundera by NerdWallet | 4.5/5 Best for Business acquisition loans with expanded credit qualification | $500,000 | 600 | with Fundera by NerdWallet |
Here are 7 business acquisition loan options
Best for Bank small-business acquisition loans
TAB Bank
Max Amount
$300,000
Min. Credit Score
660
Best for SBA business acquisition loans
Best for Online business acquisition loans
Best for Business acquisition loans for equipment
Best for Business acquisition loans for expanding an existing business
Best for Business acquisition loans with expanded credit qualification
Our pick for
Bank small-business acquisition loans
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%
Our picks for
SBA business acquisition loans
SBA 7(a) loan
Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Lowest interest rate
Max loan
$5,000,000
Min. Credit score
650
Apr range
11.50-15.00%
SBA Express loan
Max Loan Amount
$500,000
Min. credit score
650
Est. APR
11.50-15.00%
SBA Express loans are available up to $500,000 as either a term loan or line of credit.
Max loan
$500,000
Min. Credit score
650
Apr range
11.50-15.00%
Our pick for
Online business acquisition loans
Funding Circle - Online term loan
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
Max loan
$500,000
Min. Credit score
660
Apr range
15.22-45.00%
Our pick for
Business acquisition loans for equipment
Triton Capital - Equipment financing
4.0
NerdWallet rating with Fundera by NerdWallet
Max Loan Amount
$250,000
Min. credit score
600
Est. APR
5.99-35.00%
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
600
Apr range
5.99-35.00%
with Fundera by NerdWallet
Our pick for
Business acquisition loans for expanding an existing business
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
35.40-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Max loan
$250,000
Min. Credit score
625
Apr range
35.40-99.90%
Our pick for
Business acquisition loans with expanded credit qualification
National Funding - Online Term Loan
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.
Max loan
$500,000
Min. Credit score
600
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. Business assets, future earnings and current market value can be used 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.
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:
- 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.
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.
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:
- 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.
- 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.
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 August 15, 2023
Methodology
NerdWallet reviewed traditional and online lenders to create our list of the best small-business loans.
Our list includes a variety of loan options to meet the diverse funding needs of small-business owners, with an emphasis on lenders that offer a streamlined underwriting and approval process.
Each small-business loan option on our list meets the following criteria:
• Maximum loan amount of at least $250,000.
• Transparent rates and repayment terms.
• Funding available within two weeks of applying.
• Personal credit score requirements of 660 or below.
• No more than two years in business required.
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
Frequently Asked Questions
It will be more difficult to get a business acquisition loan without a good credit score. You’ll typically need good personal credit, along with strong finances, to qualify for a loan.
Some online lenders, however, may be willing to work with borrowers who face credit challenges. You may also increase your chances of approval by offering a large down payment and/or significant collateral.
Maximum borrowing amounts for business acquisition loans depend largely on the lender; some online lenders offer up to $500,000, for example, whereas SBA 7(a) loans are available up to $5 million.
The loan amount you’re eligible to borrow varies based on additional factors, including the valuation of the company you’re looking to buy and your business’s qualifications.
It is possible to get a business acquisition loan with no money down. Some online lenders may not require a down payment, especially for self-collateralizing loans, such as equipment financing.
Many other options, like bank and SBA loans, will likely require a down payment. In general, offering a down payment can help you access a loan with better rates and repayment terms.