Business acquisition loans, and what the price tag really decides
Buying a business is not a bigger version of borrowing for one. The deal is underwritten against what you are buying, secured far more tightly than ordinary lending, and repaid over a decade — and the asking price shapes all of it.
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What an acquisition loan is actually paying for
Most business lending funds something you can point at — a machine, an invoice, a month of payroll. An acquisition loan funds a transfer of ownership, and the money is spread across things that behave very differently in underwriting.
- The purchase price of the business itself. Usually the largest line, and the one the lender scrutinises hardest, because it has to be justified rather than simply invoiced.
- Goodwill. The part of the price that is not equipment, property or stock — the customer base, the name, the trading history. It is real value and it secures nothing, which is why it changes the shape of the deal.
- Tangible assets coming with the business. Equipment, vehicles, fixtures and inventory. These do secure the loan, and the more of them there are, the easier the financing tends to be.
- The property, when it is part of the sale. This changes the deal materially — and pushes it toward lenders who write real estate, on much longer terms.
- Working capital for the handover. The weeks after closing, when you are paying the business’s costs before you have learned its rhythm. Under-funding this line is a classic first-time-buyer mistake.
- Transaction costs. Valuation, legal work, due diligence and closing costs, which are real money and are rarely in the buyer’s first budget.
Two of those lines explain most of what happens next. Tangible assets can be pledged, so they make a deal financeable. Goodwill cannot, so a business whose value is mostly reputation and relationships is harder to finance than one of the same price with a yard full of equipment — even when the profitable one is the former.
You are not really borrowing against yourself
In ordinary business lending the borrower is the subject: your revenue, your credit, your time in business. In an acquisition the subject is the target — what it earns, what it owns, and whether the asking price is defensible against both.
A business that can carry its own price
Clean, verifiable financials. Earnings that comfortably cover the new debt payment on top of your own drawings. Tangible assets inside the sale. A seller willing to stay through a handover, and a customer base that is not one departure away from leaving.
Deals like this are ordinary transactions for a lender, and the conversation is about terms rather than about whether it can be done at all.
A price the numbers do not support
Value concentrated in goodwill with little to pledge. Financials that are informal, or a book of business tied entirely to the departing owner. A price set by what the seller wants rather than by what the business earns.
None of these is automatically fatal. All of them change the structure — usually meaning more buyer equity, more security, or a seller who has to carry part of the price.
This is why the valuation matters more than almost anything you bring. A strong buyer cannot rescue an indefensible price, and a defensible price makes an ordinary buyer financeable. If you take one thing into your first lender conversation, make it the target’s last three years of financials rather than your own credit report.
Acquisition loans are bigger, longer and far more secured
Between FY2020 and FY2025 the SBA approved 32,665 7(a) loans recorded as a change of ownership — 10.8% of all 7(a) approvals — worth $36.6 billion and associated with 457,119 jobs. Set against ordinary 7(a) lending, three differences stand out.
| SBA 7(a), FY2020–FY2025 | Change of ownership | All 7(a) approvals |
|---|---|---|
| Loans approved | 32,665 (10.8%) | 302,080 |
| Median approval | $675,000 | $200,000 |
| Recorded as secured | 97.4% | — |
| Median term | 120 months | — |
First, the size. The median acquisition loan is roughly three and a third times the median 7(a) loan of any kind. That is not a lender being generous; it is the simple fact that buying a whole business costs more than equipping or funding one.
Second, the security. 97.4% of these approvals were recorded as secured — among the highest rates anywhere in the file. Expect collateral and a personal guarantee to be part of the conversation from the beginning, and expect the assets inside the business you are buying to be pledged as part of it.
Third, the term. A median of 120 months puts these squarely on the ten-year schedule the SBA allows for business acquisition, rather than the twenty-five-year schedule reserved for commercial real estate. If a deal you are looking at runs materially longer than ten years, property is almost certainly part of it.
| Most frequently acquired industries | Loans | Median approval |
|---|---|---|
| Full-service restaurants | 1,757 | $430,000 |
| Hotels and motels (except casino hotels) | 1,563 | $2,700,000 |
| Limited-service restaurants | 1,421 | $385,000 |
| Gasoline stations with convenience stores | 936 | $1,439,500 |
| General automotive repair | 731 | $595,000 |
| Beer, wine and liquor retailers | 680 | $700,000 |
| Plumbing, heating and air-conditioning contractors | 665 | $710,000 |
The spread in that table is the most useful thing in it. Buying a full-service restaurant and buying a hotel are both “business acquisition”, but the median hotel deal is more than six times the median restaurant deal — because a hotel sale is usually a property sale wearing a business name. Read the median for your own category before you read anyone’s general advice about what acquisitions cost.
Volume has also grown rather than shrunk: 4,943 change-of-ownership approvals in FY2020 rising to 6,867 in FY2025, with the median holding between roughly $608,000 and $708,000 throughout. This is a stable, well-trodden category of lending, not an exotic one.
Source: U.S. Small Business Administration, 7(a) FOIA data file FOIA_7a_FY2020_Present_asof_260630.csv, as-of 30 June 2026 (accessed 3 September 2026). Population: 7(a) approvals FY2020–FY2025, excluding cancelled approvals and exact duplicate records. “Change of ownership” is the business-age category recorded on the approval. Approvals are not originations, and a loan being approved does not mean it was disbursed. Historical data describes past lending, not current availability or terms. SBA maximum terms by use are published by the SBA.
Three things that decide whether an acquisition funds
Buyers tend to arrive focused on their own credit. Lenders are usually looking somewhere else first.
Whether the earnings cover the payment
The business has to service the new debt out of what it already earns, with room left over. This is the first test, and it is arithmetic rather than judgement — which is why a credible set of financials from the seller matters more than almost anything you supply.
Three years of financials and tax returns from the seller, and a clear view of any owner expenses that will not continue after the sale.
How much of the price is goodwill
The more of the purchase price sits in intangible value, the less there is to pledge, and the more the deal leans on cash flow and on what the buyer puts in. Two businesses at the same price can be very different financing propositions.
An asset schedule that separates equipment, vehicles, stock and property from the goodwill portion — before you apply, not during underwriting.
Whether the seller stays in the deal
A seller note — the seller financing part of the price and being repaid over time — is common in acquisitions, and a seller willing to carry part of the price is telling the lender something about their own confidence in the business.
Agreeing the shape of any seller note and any transition period early. Both affect the structure a lender can offer, and both are far harder to renegotiate late.
Your own credit, experience and contribution still count — particularly relevant operating experience in the industry you are buying into. But they are the second question. The first is whether the business can pay for itself.
One boundary worth stating plainly. Where the property is part of the purchase, that is commercial real estate lending, and Fundur is a financing marketplace, not a lender, and does not place commercial real estate mortgages. Those deals belong with an SBA lender or a property lender — see how SBA loans work, where terms run up to 25 years for commercial real estate against 10 years for a business acquisition.
What the buyer has to put in
The number most buyers want early, and the one this page has so far talked around. On an SBA-guaranteed complete change of ownership there is a floor: the buyer has to inject at least 10% of the deal. Two details about that 10% catch people out.
The first is what it is calculated on. It is total project cost — the SBA’s wording is all costs required to become operational or to complete the change of ownership — not the headline purchase price. Closing costs, fees and any working capital being borrowed alongside the purchase are inside the number the 10% is measured against, so the requirement is usually a little larger than a buyer working from the sticker price expects.
The second is that a seller note can carry up to half of it, but only on full standby: no principal and no interest for the life of the SBA loan. A seller note with payments running alongside the loan does not count toward the injection, however it is described in the letter of intent.
| On a $1,000,000 total project cost | Amount | Where it can come from |
|---|---|---|
| Minimum equity injection | $100,000 | 10% of total project cost, not of the purchase price. |
| Most a seller note can cover | $50,000 | Capped at half the required injection, and only on full standby for the life of the loan. |
| Cash the buyer still finds | $50,000 | The buyer’s own funds, or an eligible source the lender will verify. |
So on a deal of that size, a buyer who has agreed a standby seller note is still writing a cheque for around 5% of the project. A buyer without one is writing it for the full 10%. That single point — whether the seller will stand behind a note and accept nothing until the SBA loan is repaid — moves the buyer’s cash requirement more than almost anything else in the negotiation, which is why it is worth raising with the seller early rather than at closing.
Buying out a co-owner rather than a whole business is a change of ownership too, and the same question arrives in the same place: what goes in, and where does it come from. The valuation work differs, and so does the paperwork, but a partner buyout is not the paperwork-free option it is sometimes assumed to be.
Which financing fits the purchase you are making?
Acquisitions rarely use one instrument. The purchase itself, the equipment inside it and the first months of trading are often funded three different ways.
“I am buying an established business and I can wait for the right terms.”
SBA Loans
Government-guaranteed lending with long repayment terms — the route most acquisitions in the data actually took.
Explore SBA loans“I need one lump sum on a predictable schedule to complete the purchase.”
Business Term Loan
A single amount repaid on a fixed schedule — the simplest shape for a costed, defined purchase.
Explore term loans“The equipment coming with the business needs replacing almost immediately.”
Equipment Financing
Secured on the equipment itself, so it does not compete with the purchase financing for the same collateral.
Explore equipment financing“The handover months are going to be uneven and I want a cushion.”
Business Line of Credit
Reusable capacity drawn only in the weeks you need it, which suits a period you cannot forecast precisely.
Explore a line of credit“I am buying into a brand rather than an independent business.”
Franchise Financing
A resale of an existing franchised unit is underwritten differently from an independent purchase, and the franchisor is a participant in it.
Explore franchise loans“Payroll and suppliers need covering while I find my feet.”
Working Capital Loan
A lump sum sized to everyday operating cost, when the pressure is general rather than a specific purchase.
Explore working capital loansBuying into a specific trade? Browse financing by industry, or start with small business loans if you are not sure which product you need.
Business acquisition loan FAQs
How much do business acquisition loans usually run to?
In the SBA 7(a) record for FY2020–FY2025, the median change-of-ownership approval was $675,000, against a median of $200,000 across all 7(a) approvals — roughly three and a third times larger. But the spread by industry is wide: the median hotel or motel acquisition was $2,700,000 while the median full-service restaurant acquisition was $430,000.
Does the lender look at me or at the business I am buying?
Both, but the business comes first. The initial test is whether its earnings can service the new debt payment with room to spare, which is why the seller's financials matter more than your own credit report at the opening stage. Your credit, contribution and relevant operating experience are the second question, not the first.
Why is goodwill such a big deal in acquisition financing?
Goodwill is the part of the price that is not equipment, property or stock — the customer base, the name, the trading history. It is genuine value, but it cannot be pledged as security. So two businesses at the same asking price can be very different financing propositions depending on how much of that price is tangible.
How long are acquisition loans repaid over?
The median term in the SBA data is 120 months. That reflects the SBA's maximum of up to ten years for business acquisition, against up to twenty-five years for commercial real estate. If a deal runs materially longer than ten years, property is almost certainly part of the purchase.
Will I need to put my own money in?
Buyer contribution is a normal part of acquisition financing, and how much is expected depends on the lender, the programme and how much of the price is tangible. There is no single published figure that applies across the market. What is consistent in the data is that these loans are secured: 97.4% of SBA change-of-ownership approvals were recorded as secured.
What is a seller note and why do lenders like them?
A seller note is where the seller finances part of the purchase price and is repaid over time rather than taking all the money at closing. It reduces the amount that has to be borrowed elsewhere, and a seller willing to carry part of the price is signalling their own confidence in the business continuing to perform.
Can I finance buying the property along with the business?
That is a different transaction. Where real estate is part of the purchase it becomes commercial real estate lending, on much longer terms, and it belongs with an SBA lender or a property lender. Fundur does not place commercial real estate mortgages.
How does Fundur help?
One application is compared across the options available for your situation, with the differences explained — including saying plainly when what you need sits outside what a marketplace can place. Fundur is a financing marketplace, not a lender, and is not affiliated with the SBA. Checking your options is a soft inquiry and will not affect your credit score.
Tell us about the business you are buying. We will find the financing that fits.
Bring the target's financials and the asking price, and an advisor will walk through the routes that are realistically open to the deal.
Fundur is a financing marketplace, not a lender. Fundur does not make credit decisions or guarantee approval, rates, terms, or funding times. A dedicated funding advisor can walk you through any option you receive. Final terms depend on lender approval.