Everyone Lists the Options. Nobody Tells You the Truth.
If you Google “how to finance a business acquisition,” you’ll find dozens of articles listing 8, 10, even 12 different financing methods. Conventional bank loans. Private equity. Venture capital. Leveraged buyouts. Seller financing. Earnouts. Company equity. Asset-based lending. Crowdfunding. The list goes on.
These articles make it sound like you’re standing in front of a buffet of acquisition financing options, each one equally viable. Just pick the one that suits your taste.
That’s not how it works.
If you’re a normal person — someone with a good career, some savings, solid credit, and the ambition to buy a small business — the vast majority of those “options” don’t actually exist for you. They’re either designed for corporations acquiring other corporations, they require you to already have millions of dollars, or they come with terms so predatory they’d put the acquisition underwater before you even start.
Here’s the truth: for most people buying a small business, an SBA loan is practically the only real financing option. Everything else is either a fantasy, a fallback, or a footnote.
Let’s walk through every financing method the experts talk about — and explain why the SBA loan stands alone.
The “Options” Everyone Mentions (And Why Most Don’t Work)
Conventional Bank Loans
In theory, you can walk into a bank and ask for a business acquisition loan. In practice? Most conventional lenders won’t touch acquisition financing for small businesses. Here’s why:
- Down payments of 20-30% — on a $1M business, that’s $200K-$300K in cash you need upfront
- Interest rates are higher than SBA loans because there’s no government guarantee reducing the bank’s risk
- Shorter repayment terms — typically 5-7 years vs. 10 years with SBA, which means crushing monthly payments
- Most banks simply decline — acquisition lending is risky for them without SBA backing, so they’d rather not bother
The irony? When banks do make acquisition loans, they usually do it through the SBA program anyway. The conventional bank loan for business acquisitions is, in most cases, an SBA loan wearing a different label.
Private Equity and Venture Capital
Articles love mentioning private equity and venture capital as acquisition financing options. Let’s be real about what this means:
- Private equity firms acquire businesses themselves — they don’t fund your acquisition of a small business
- PE firms target companies doing $5M+ in EBITDA. Your local HVAC company or dental practice? Not interesting to them.
- Venture capital is for high-growth startups, not acquiring existing small businesses. A VC will laugh you out of the room if you pitch buying a laundromat.
- If a PE firm did get involved, they’d want controlling equity — meaning you’d be an employee in the business you “bought”
Private equity and venture capital are options for people who are already wealthy or for companies acquiring other companies. For an individual buying a small business? This doesn’t exist.
Seller Financing
Seller financing is real — and it’s common. But here’s what the articles don’t tell you: seller financing almost never covers the full purchase price.
- Most sellers offer 5-20% of the purchase price as a seller note
- It’s typically used to supplement an SBA loan, not replace one
- Sellers want most of their money upfront — they’re selling because they want to cash out
- Interest rates on seller notes are often higher than SBA rates
- Terms are short: 2-5 years with balloon payments
Seller financing is a useful piece of the puzzle. But the puzzle still needs a primary financing source — and that source is almost always an SBA loan. In fact, SBA lenders often require some seller financing as part of the deal structure. The two work together, but the SBA loan is the engine.
Leveraged Buyouts (LBOs)
The leveraged buyout sounds exciting — use the target company’s own assets and cash flow to finance the acquisition. This is real in the world of mid-market and large-cap deals. For small business acquisitions? Forget it.
- LBOs require sophisticated debt structures that no lender will build for a $500K-$5M deal
- The debt loads are extreme — if anything goes wrong in year one, the business collapses
- Investment banks that structure LBOs don’t return calls for deals under $10M
- The failure rate is high even for professional PE firms. For a first-time buyer? The risk is astronomical.
Personal Savings and 401(k) Rollovers (ROBS)
Yes, you can use personal savings. And yes, ROBS (Rollovers as Business Startups) technically lets you use your 401(k) to buy a business without early withdrawal penalties.
But consider this: the IRS has publicly stated that “most ROBS businesses either failed or were on the road to failure” with high rates of bankruptcy. You’re gambling your entire retirement on a single business. That’s not a financing strategy — that’s a desperation move.
Personal savings should go toward your down payment (typically 10% with an SBA loan), not toward funding the entire purchase.
Earnouts
An earnout ties part of the purchase price to the business’s future performance. The seller gets paid over time based on revenue or profit targets. Creative? Sure. Practical for most deals? Not really.
- Sellers generally hate earnouts because they bear the risk of the buyer’s performance
- They create ongoing disputes about how the business is being run post-sale
- Most sellers who agree to earnouts are desperate — which raises red flags about the business itself
- Earnouts don’t solve the primary financing problem — you still need capital to operate
Asset-Based Lending
Asset-based loans use the target company’s assets (equipment, inventory, receivables) as collateral. The problem? Most small businesses being sold are service businesses or light-asset businesses. A consulting firm, a marketing agency, a home services company — they don’t have enough hard assets to collateralize a loan.
Even when assets exist, asset-based lenders advance only 50-80% of asset value, leaving a massive gap.
Crowdfunding
Some articles actually list crowdfunding as a business acquisition financing option. Let’s not dignify this with more than one sentence: nobody is crowdfunding a business acquisition.
Issuing Bonds and Company Equity
These options exist for publicly traded companies and large private corporations. If you’re reading this article to figure out how to buy a small business, you’re not issuing bonds. Moving on.
The Acquisition Process Is Complex — Financing Is the Make-or-Break Moment
What most financing articles gloss over is that buying a business isn’t just about finding the money. It’s a multi-step process that can take months: defining your acquisition strategy, evaluating targets, signing letters of intent, conducting due diligence, negotiating terms, and finally closing the deal.
Here’s what’s important to understand: acquisitions are far more common among small and medium-sized businesses than the mega-deals you read about in the news. According to M&A research, the vast majority of business acquisitions happen at the Main Street level — local service companies, franchises, medical practices, and trade businesses changing hands between individual buyers and sellers.
And here’s where most deals die: financing.
You can find the perfect business target. You can negotiate a fair price. You can complete due diligence and draft a purchase agreement. But if you can’t secure financing that actually closes, none of it matters. The typical due diligence window is 30-60 days — and if your financing isn’t locked in by then, the seller moves on to the next buyer.
This is why experienced acquisition advisors recommend lining up your financing strategy before you even start looking at businesses. Not after you find one. Not during due diligence. Before. Knowing what you qualify for, how much you can borrow, and how long the process takes gives you a massive advantage over buyers who scramble to figure out financing after they’ve already signed an LOI.
And when you line up financing early? The answer, once again, points to SBA. It’s the only program with standardized terms, predictable timelines, and a proven track record for individual buyers acquiring small businesses.
Why the SBA Loan Is the Only Real Option
Now that we’ve eliminated the noise, let’s talk about why the SBA loan isn’t just the best option — it’s the only practical option for most business acquisitions.
It Was Literally Designed for This
The Small Business Administration’s 7(a) loan program was specifically created by the federal government to help Americans buy, start, and grow small businesses. It’s not a generic lending product that happens to work for acquisitions — business acquisition is one of its primary use cases.
The Terms Are Unmatched
- Down payment as low as 10% — compared to 20-30% for conventional loans
- Up to 10-year repayment terms — keeping monthly payments manageable
- Interest rates capped by the SBA — typically Prime + 2.75% for loans over $350K
- No balloon payments — fully amortizing, so you’re building equity from day one
- Can include working capital — so you have cash to operate after closing
The Government Guarantees 75-85% of the Loan
This is the secret that makes everything else possible. Because the SBA guarantees the majority of the loan, banks are willing to lend for acquisitions they’d otherwise decline. It de-risks the deal for the lender, which means you get approved for loans that simply wouldn’t exist without the program.
It Works for Real Businesses at Real Price Points
SBA 7(a) loans go up to $5 million — covering the vast majority of small business acquisitions. Whether you’re buying a $300K franchise, a $1.5M medical practice, or a $4M manufacturing company, the SBA loan scales to fit.
The Catch: SBA Loans Are Complicated
If SBA loans are so great, why doesn’t everyone get one? Because the process is demanding:
- Documentation is extensive — personal financial statements, tax returns, business plans, financial projections, and more
- Not every lender does SBA acquisition loans — many SBA-approved lenders focus on real estate or startups, not business purchases
- Underwriting standards vary wildly — one lender declines you while another approves the same deal
- The business plan requirement is real — lenders want to see you’ve done your homework, and a weak plan sinks your application
- Timing matters — the process takes 45-90 days, and deals fall apart if you can’t close on schedule
This is exactly why working with an experienced SBA loan broker changes everything.
How GoSBA Makes Business Acquisition Financing Actually Work
At GoSBA, we don’t dabble in SBA lending. It’s all we do. We’ve built the infrastructure to take you from “I want to buy a business” to “I own a business” — faster and more reliably than going it alone.
50+ Lender Network
We don’t send your application to one bank and hope for the best. We match your deal to the right lender from our network of 50+ SBA-approved lenders. Different lenders have different appetites — some love restaurants, others prefer professional services, some specialize in manufacturing. We know who wants your deal and we send it there first.
$320M+ Funded in 2025
This isn’t theory for us. In 2025 alone, we facilitated over $320 million in SBA loan funding. We know what gets approved, what gets declined, and how to structure deals that close. That volume gives us leverage and credibility with lenders that you simply can’t replicate as an individual applicant.
Free Business Plan & Financial Projections ($2,500-$5,000 Value)
Remember how we said a weak business plan sinks your application? We eliminate that problem entirely. GoSBA provides a professionally written business plan and financial projections at no cost to you — a service that business plan consultants charge $2,500 to $5,000 for. This isn’t a template. It’s a lender-ready document built by people who know exactly what SBA underwriters want to see.
100% Free Service
GoSBA is completely free for borrowers. We’re compensated by lenders when your loan closes — which means our incentives are perfectly aligned with yours. We only succeed when you get funded.
What a Typical SBA Business Acquisition Looks Like
Here’s how it works in the real world:
- You find a business to buy — through a broker, marketplace, or direct negotiation
- You contact GoSBA — we review the deal, the financials, and your background
- We build your loan package — including the business plan, financial projections, and all required documentation
- We match you with the right lender — from our 50+ lender network based on deal size, industry, and geography
- The lender underwrites and approves — typically in 45-60 days
- You close and take ownership — with working capital built into the loan so you can hit the ground running
It’s not magic. It’s process, relationships, and experience — applied to every deal.
Stop Reading About Financing Options That Don’t Exist
The internet is full of articles that list every theoretical way to finance a business acquisition. Most of those methods are designed for Fortune 500 companies, private equity firms, or people who already have millions in the bank.
If you’re a real person looking to buy a real small business, the path is clear: an SBA loan, structured properly, matched to the right lender, with a bulletproof loan package.
That’s what GoSBA delivers. Every day. For free.
Ready to Finance Your Business Acquisition?
Contact GoSBA today for a free consultation. Tell us about the business you want to buy, and we’ll tell you exactly how to get it funded. No cost. No obligation. Just the fastest path from “interested buyer” to “business owner.”
