Accessing SBA loans for business acquisition with minimal equity injection and favorable terms.
When Melissa wanted to buy a successful restaurant in her neighborhood, she was worried about the high cost and risk involved. She didn’t have enough savings to make a large down payment, and he didn’t want to take on a huge debt with high interest rates. She thought she had to give up on his dream of owning his own business.
But then she discovered Spartan, a company that helps entrepreneurs access SBA loans for business acquisition. With Spartan’s help, Melissa was able to buy the restaurant with just 5% down, which she received as a gift from his family.
She also got a favorable loan term of 25 years, with a low SBA-backed interest rate. She was able to preserve his liquidity, avoid rent increases, and start generating revenue right away. She was thrilled with her decision and grateful to Spartan for making it possible.
If you’re like Melissa and want to buy an existing and profitable business with minimal equity injection and favorable terms, you should consider an SBA business acquisition loan.
In this article, we’ll explain what an SBA business acquisition loan is, how it works, and how Spartan can help you get one.
What is an SBA Business Acquisition Loan?
An SBA business acquisition loan is a type of loan that is partially guaranteed by the Small Business Administration (SBA), a federal agency that supports small businesses.
The SBA does not lend money directly, but rather works with approved lenders to provide loans to eligible borrowers.
An SBA business acquisition loan can be used to purchase an existing business or franchise, as well as the real estate associated with it.
The loan can cover up to 90% of the purchase price, leaving only 10% for the borrower to contribute as equity. Of this 10%, at least half (5%) must come from the borrower’s own funds or a gift, while the rest can come from the seller or another source.
An SBA business acquisition loan has several advantages over conventional bank loans, such as:
- Lower down payment requirement
- Longer repayment period (up to 25 years)
- Lower interest rate (based on the prime rate plus a margin)
- No collateral requirement (except for the business assets)
- Flexible use of funds (can cover working capital, inventory, equipment, etc.)
How Does an SBA Business Acquisition Loan Work?
To apply for an SBA business acquisition loan, you need to meet certain eligibility criteria, such as:
- Having a good credit score (at least 650)
- Having sufficient industry experience and management skills
- Having enough cash flow to service the debt
- Having a clear business plan and financial projections
- Having a signed purchase agreement with the seller
You also need to find a lender that participates in the SBA loan program and is willing to finance your deal. This can be challenging, as different lenders have different requirements and preferences. Some lenders may not be familiar with your industry or market, or may not offer the loan amount or term that you need.
That’s where Spartan comes in.
Spartan is a company that specializes in helping entrepreneurs access SBA loans for business acquisition. We have over 100 lending partners across the country, and we can match you with the best option for your situation.
Additionally, we also provide pre-qualification assistance, loan documentation support, and industry-specific expertise to make the process easier and faster.
How Can Spartan Help You Get an SBA Business Acquisition Loan?
Spartan is more than just a broker or a referral service. We are your partner and advocate throughout the entire process of getting an SBA business acquisition loan.
Here’s how we can help you:
Pre-Qualification Assistance
Before you start looking for a business to buy, you need to know how much you can afford and what kind of loan you can qualify for. We can help you assess your eligibility and prepare your financial statements before you begin the application process. We can also help you find businesses that meet your criteria and fit your budget.
Loan Documentation Support
Once you have a purchase agreement with the seller, you need to submit a loan application package to the lender. This package includes various documents, such as:
- Personal financial statement
- Personal tax returns
- Business tax returns
- Business financial statements
- Business valuation report
- Business plan
- Purchase agreement
- Lease agreement (if applicable)
We can help you prepare and submit all these documents in a timely and accurate manner, minimizing errors and delays. We can also help you negotiate the best terms and conditions for your loan, such as the interest rate, the loan term, the fees, and the covenants.
Industry-Specific Expertise
We have extensive experience across various industries, such as:
- Restaurants
- Hotels
- Gas stations
- Convenience stores
- Manufacturing
- Healthcare
- Professional services
- And more
We understand the unique challenges and opportunities of each industry, and we can provide specialized guidance and support tailored to your business type.
We can also help you evaluate the potential and risks of the business you want to buy, and advise you on how to improve its performance and profitability.
Our Team of SBA Bankers
Spartan works directly with former SBA bankers who have a deep knowledge of all aspects of lending. We know how lenders think and what they look for in a borrower.
We also know how to navigate the SBA rules and regulations, and how to avoid common pitfalls and mistakes. We are your advocate, and we get it right the first time.
Why Choose an SBA Business Acquisition Loan?
If you want to buy an existing business, an SBA business acquisition loan may be the best option for you. Here are some of the benefits of choosing an SBA business acquisition loan over other financing options:
Obtain a Business Loan Without Collateral
One of the biggest challenges of getting a conventional bank loan is having enough collateral to secure the loan. Collateral is an asset that you pledge to the lender in case you default on the loan. If you don’t have enough collateral, or if your collateral is not acceptable to the lender, you may not get approved for the loan.
With an SBA business acquisition loan, you don’t need to have any collateral, except for the business assets that you are buying. The SBA guarantees up to 75% of the loan amount, which reduces the risk for the lender and makes it easier for you to get approved.
Diverse Financing Options
Another challenge of getting a conventional bank loan is finding a lender that offers the loan amount and term that you need. Conventional banks may not be willing to lend more than a certain amount, or for longer than a certain period. They may also impose strict restrictions on how you can use the funds.
With an SBA business acquisition loan, you have more flexibility and choice in terms of financing options. You can borrow up to $10 million, depending on the size and value of the business you are buying. You can also choose a loan term of up to 25 years, depending on the type and condition of the assets you are financing. You can also use the funds for various purposes, such as working capital, inventory, equipment, debt refinancing, etc.
Protect Your Cash Flow
Another benefit of choosing an SBA business acquisition loan is that it can help you protect your cash flow and liquidity. Cash flow is the amount of money that flows in and out of your business on a regular basis. Liquidity is the amount of cash or liquid assets that you have available at any given time.
Cash flow and liquidity are essential for running and growing your business. You need cash flow to pay your bills, your employees, your suppliers, and your taxes. You also need liquidity to deal with unexpected expenses or opportunities.
With an SBA business acquisition loan, you can preserve your cash flow and liquidity by making a lower down payment (as little as 5%) and having lower monthly payments (due to longer loan terms and lower interest rates). This way, you can keep more money in your pocket and invest it back into your business.
Bypass the Start-Up Phase and Own a Mature Business
One of the biggest advantages of buying an existing business over starting one from scratch is that you can bypass the start-up phase and own a mature business. The start-up phase is the most difficult and risky part of any business venture. It involves creating a product or service, finding a market, building a customer base, establishing a brand, hiring staff, setting up operations, etc.
Many start-ups fail within the first few years due to lack of funding, market demand, customer loyalty, or competitive advantage. Even if they survive, they may not generate enough revenue or profit to sustain themselves or grow.
By buying an existing business, you can avoid these challenges and risks. You can benefit from:
- An established product or service that has proven demand and quality
- An existing customer base that provides recurring revenue and referrals
- A recognized brand that has reputation and credibility
- A trained staff that has experience and skills
- An operational system that has efficiency and productivity
Of course, buying an existing business also comes with its own challenges and risks, such as:
- Paying a premium price that reflects the value of the business
- Assuming any existing liabilities or debts that the business may have
- Dealing with any legal or regulatory issues that may affect the business
- Adapting to any changes in market conditions or customer preferences
Ready to Buy Your Dream Business?
If you’ve always wanted to own your own business, but thought it was too expensive or risky, think again. With an SBA business acquisition loan, you can buy an existing and profitable business with just 5% down and favorable terms. You can also enjoy the benefits of owning a mature business, such as:
- Having an established product or service that has proven demand and quality
- Having an existing customer base that provides recurring revenue and referrals
- Having a recognized brand that has reputation and credibility
- Having a trained staff that has experience and skills
- Having an operational system that has efficiency and productivity
But getting an SBA business acquisition loan can be challenging, especially if you don’t have the right guidance and support. That’s why you need Spartan, the company that specializes in helping entrepreneurs access SBA loans for business acquisition. We can help you:
- Pre-qualify for an SBA loan before you start looking for a business to buy
- Find a lender that matches your needs and preferences
- Prepare and submit all the necessary documentation for your loan application
- Negotiate the best terms and conditions for your loan
- Evaluate the potential and risks of the business you want to buy
- Improve the performance and profitability of your business
Don’t let this opportunity pass you by.
Check to see if you pre-qualify for an SBA business acquisition loan today, without impacting your credit score. It only takes 5 minutes to apply online, and you’ll get a response within 24 hours.
Don’t wait any longer. Buy your dream business with just 5% down using an SBA loan. Apply now and let Spartan make it happen for you.
