SBA Loan Options for Business Acquisitions

Now is the time to look into buying a business. With the market at a high, lenders have taken notice. If you have your eyes on buying a new business, there is help out there in terms of financing. An SBA loan is one of the most common lending options that owners use when acquiring a new business or growing their own. It’s important that you know the options available for you when it comes to business acquisition financing.

Entrepreneurial Funding

The SBA has the back of entrepreneurs that hope to purchase a new company. The lending options include SBA loans. SBA loans provide lenders with a guarantee. If you default on a loan, then the SBA will cover a portion of the loss covered by the lender. With business acquisitions, there are risks involved. Traditional lenders may be less likely to loan money if there is not some form of a guarantee. The SBA has since relaxed some of its requirements to help encourage entrepreneurs to make acquisitions. 

SBA 7(a) Loan

This SBA loan is the most common option for businesses. This is the most basic loan option. Now, keep in mind that there is a maximum amount. Now, most businesses won’t have any trouble staying below the mark, but if you think that you may need more than two million dollars, this might not be the loan option for you. However, for most, it’s perfect. The SBA 7(a) loan allows for those who may have less experience or perhaps have never bought a company before to make an acquisition.

SBA 7(a) Loan Changes

The options are less stringent than they used to be, due to recent changes. There are now lower equity requirements and the seller standby rule has been extended. There are also franchise directories so that you can see which franchises are eligible for SBA loans. There are a lot more opportunities for different kinds of borrowers. While there are more people that are eligible for the loan, it’s always important to discuss your eligibility in advance.

If you’re prepared to buy a business, now is the time to do it. Of course, even if you’re ready to get into acquisitions, you’ll still have to find some form of financing. SBA loans are there for small businesses that need help with financing. Even if you are choosing to purchase a company, you still are capable of utilizing an SBA loan.

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