Business Acquisition Financing: Strategic Capital for Growth
$500K to $5M (SBA 7(a)) | Up to $13.75M+ (SBA 504) | 10% Down
Acquiring an established business accelerates growth faster than building from scratch—but only when you structure financing correctly. Most business owners waste 60-90 days getting declined by banks that don't understand acquisition lending.
LVRG specializes in SBA acquisition financing. We connect qualified buyers with 25+ lenders who actually fund these deals and close in 50-65 days.
📞 (855) 998-5874
Why Banks Decline 8 Out of 10 Acquisition Deals
Major banks turn down qualified buyers every day—not because they don't qualify, but because acquisition financing requires specialized underwriting most banks avoid.
What typically happens:
❌ Your bank says "we don't do acquisitions" – They prefer simpler real estate or equipment loans
❌ Lenders demand 20-30% down – Draining working capital before you even own the business
❌ Timeline uncertainty kills deals – 90-120 days of back-and-forth while sellers accept other offers
❌ Vague decline reasons – "Industry risk," "insufficient management experience," or "target business too small"
Reality: Getting approved has little to do with qualification. It's about matching your deal structure to the RIGHT lender.
That's our specialty.
SBA Acquisition Financing Programs
SBA 7(a) Acquisition Loans – Up to $5 Million
The most versatile option for business acquisitions without significant real estate.
Loan Amount: Up to $5 million
Down Payment: 10% minimum
Terms: 10 years (25 years if real estate included)
Current Rates: 10.5-13% variable
Structure: Asset purchase, stock purchase, or membership interest acquisition
Best For:
Pure business acquisitions
Bolt-on acquisitions (adding locations or capacity)
Franchise purchases
Deals requiring working capital post-acquisition
Real Example: $3M manufacturing company acquisition
$300K buyer equity (10%)
$2.4M SBA 7(a) loan (10.5%, 10-year term)
$300K seller note (subordinated, 6%, 5 years)
Monthly payment: ~$32,000
SBA 504 Acquisition Loans – Up to $13.75M+ Total Financing
Designed for acquisitions where real estate or equipment represents significant value.
Maximum CDC Portion: $5 million (standard) | $5.5 million (manufacturing/energy)
Maximum Total Financing: $13.75 million in standard 50/40/10 structure
No Regulatory Cap: Projects above $13.75M possible if bank exceeds 50%
Structure:
50% Bank financing (first lien) – NO LIMIT on bank portion
40% CDC/SBA 504 loan (second lien) – $5-5.5M maximum
10% Buyer equity
Terms: 10, 20, or 25 years (fixed rate on CDC portion)
CDC Rates: 6.2-6.5% fixed
Bank Rates: 9-11% variable
Best For:
Acquisitions where real estate = 40%+ of purchase price
Manufacturing businesses with significant equipment
Owner-occupied commercial facilities
Buyers wanting long-term fixed-rate stability
How the Math Works: The $5.5M CDC limit represents 40% of total project financing.
$5.5M ÷ 0.40 = $13.75M maximum total project
Bank provides $6.875M (50%)
CDC provides $5.5M (40%)
Buyer provides $1.375M (10%)
Real Example: $10M acquisition (building + operating business)
$1M buyer equity (10%)
$5M bank loan (50%, variable ~10%)
$4M CDC loan (40%, fixed 6.3%, 20 years)
Blended effective rate: ~8.5%
Monthly payment: ~$72,000
Down Payment Requirements
Standard: 10% for qualified buyers
Despite what you may hear, 100% acquisition financing is extremely rare and requires very specific circumstances:
You currently own a profitable business in the same industry (same NAICS code)
You're acquiring another business with identical operations
Seller provides financing on full standby for equity requirement
For most acquisitions: Expect 10-15% down payment
Acceptable Sources of Equity
✅ Cash from personal savings
✅ Home equity or investment liquidation
✅ Seller note on full standby (counts toward 50% of equity requirement)
✅ ROBS – Rollover for Business Startups (401k funds without tax penalty)
✅ Gift funds from family members
✅ Borrowed funds (if alternate income source exists for repayment)
What Won't Work
❌ Seller financing not on full standby
❌ Projected cash flow from acquired business
❌ Unsecured personal loans without alternate repayment source
Current Interest Rates (November 2025)
SBA 7(a) Acquisition Loans
Variable Rates (most common):
$350K to $5M: Prime + 3% = ~10.5%
$250K to $350K: Prime + 4.5% = ~12%
Under $250K: Prime + 6% = ~13.5%
Fixed Rates (when available): 10.5-13%
Current prime rate: 7.5% (as of October 2025)
SBA 504 Acquisition Loans
CDC Portion (Fixed Rates):
25-year term: 6.24%
20-year term: 6.31%
10-year term: 6.35%
Bank Portion (first lien, 50%): Typically 9-11% variable
Key Advantage: CDC portion fixed for life of loan—no interest rate risk on 40% of financing.
Buyer Qualification Requirements
Personal Qualifications
Credit: FICO 660+ minimum (680-700 preferred)
Credit History: Clean record, no major derogatory marks in past 24 months
Debt-to-Income: Under 50% including new loan payment
Liquidity: 10-15% for down payment + 3-6 months working capital reserves
Personal Guarantee: Required for all owners with 20%+ ownership
Industry Experience
Direct Experience: 2-5 years in same or closely related industry
Transferable Skills: Management experience in similar business model
Alternative: Strong transition plan with seller retention or experienced management team staying
Target Business Requirements
✅ Operating History: Minimum 2 years (3+ years preferred)
✅ Cash Flow: 1.25x debt service coverage ratio minimum
✅ Financial Records: Clean financials matching tax returns
✅ Customer Base: No single customer representing >25% of revenue
✅ Operations: Transferable without heavy seller dependency
✅ Valuation: Market-rate purchase price (typically 2-4x adjusted EBITDA)
Industries We Finance for Acquisitions
Manufacturing & Distribution – Competitor acquisitions, vertical integration, supplier purchases, production capacity expansion
Automotive Services – Multi-location consolidation, franchise acquisitions, competitor buyouts, service center expansion
Healthcare Practices – Physician practices, dental offices, veterinary clinics, urgent care facilities, therapy practices
Construction & Trades – General contractors, electrical, HVAC, plumbing, landscaping, market consolidation
Service Businesses – Professional services, business services, recurring revenue models, B2B operations
Restaurants & Food Service – Independent restaurants, franchise acquisitions, multi-unit consolidation, QSR expansion
Why Banks Decline Qualified Buyers
Even strong buyers with good credit get declined. Common reasons:
1. Wrong Lender for Your Industry
Banks have sector preferences they don't advertise. One bank's "too risky" is another bank's specialty.
2. Deal Structure Doesn't Fit
Asset vs. stock purchase, working capital components, earnouts, seller financing—structure matters.
3. Target Business Issues
Customer concentration, declining revenue, lease concerns, key employee dependencies.
4. Inadequate Transition Planning
Seller leaving immediately, unclear key employee retention, no operational continuity plan.
5. Purchase Price Concerns
Valuation doesn't align with lender's methodology or exceeds supportable cash flow multiples.
Our Solution: We pre-underwrite your deal, identify issues before lender submission, and match you with lenders who actually fund deals like yours.
The LVRG Advantage
Pre-Underwriting Before Submission
We analyze deal structure and identify issues before any lender sees your file. This eliminates:
Wasted time with lenders who'll decline
Multiple credit inquiries from bank shopping
Preventable deal-killers that could be structured differently
25+ Specialized SBA Lenders
Our network includes:
Preferred Lender Program (PLP) banks with fast-track SBA authority
Regional banks specializing in specific industries
Non-bank SBA lenders taking deals big banks won't touch
CDCs for 504 financing in all 50 states
Expert Deal Packaging
We prepare your complete acquisition file:
Executive summary positioning the acquisition strategically
Normalized EBITDA and quality of earnings analysis
Transition plan and operational integration strategy
All required documentation formatted to SBA standards
Zero Cost to You
Lenders compensate us through standard broker fees built into every SBA loan—whether you use a broker or go direct.
You receive:
Better pricing (due to our lender relationships and volume)
Expert guidance (worth $5K-$10K from consultants)
Access to 25+ lenders (impossible to reach individually)
White-glove service from application through closing
Acquisition Financing Timeline
Days 1-7: Initial Consultation
Review acquisition details, analyze deal structure, gather preliminary documentation, determine optimal loan program
Days 7-14: File Packaging & Pre-Underwriting
Prepare complete loan package, conduct internal pre-underwriting, identify and address potential issues proactively
Days 14-30: Lender Submission
Present to best-fit lenders from our network, manage all lender communication and document requests
Days 30-50: Underwriting & SBA Approval
Bank underwrites and approves, SBA issues guarantee, clear all conditions
Days 50-65: Closing & Funding
Coordinate with attorneys and escrow, finalize closing requirements, fund acquisition
Total Timeline:
✅ SBA 7(a): 50-65 days
✅ SBA 504: 60-90 days
Compare to going direct: 90-120 days (if not declined)
What Makes an Acquisition Financeable?
Strong Acquisitions Have
✅ Consistent track record: 3+ years of stable or growing revenue and cash flow
✅ Adequate debt service coverage: 1.25x DSCR minimum after acquisition debt
✅ Diversified customer base: No customer representing >25% of revenue
✅ Clean financials: Records match tax returns, no unexplained discrepancies
✅ Transferable operations: Not dependent on seller relationships or unique expertise
✅ Market-rate valuation: Purchase price aligns with industry multiples (2-4x EBITDA typically)
Red Flags Lenders Watch For
⚠️ Declining revenue: >10% year-over-year decrease
⚠️ Customer concentration: Single customer = 40%+ of revenue
⚠️ Financial discrepancies: Statements don't match tax returns
⚠️ Seller dependency: Critical role without employment agreement post-close
⚠️ Overvaluation: Purchase price significantly above market multiples
⚠️ Lease issues: Expiring within loan term without renewal option or assignment clause
Frequently Asked Questions
Q: How much do your services cost?
A: Zero. We're compensated directly by lenders through standard broker fees. You receive expert service at no cost.
Q: Can I finance 100% of the acquisition?
A: Extremely rare. Only possible if: (1) you own a profitable business in the same industry acquiring with identical NAICS code, or (2) seller provides subordinated note on full standby. Most deals require 10-15% cash down.
Q: What if I've already been declined by banks?
A: This is our specialty. A decline from Chase, Wells Fargo, or PNC doesn't mean you don't qualify for an SBA loan—it means you need a different lender with different credit criteria. We've successfully funded hundreds of acquisitions after major bank declines.
Q: How long does SBA acquisition financing actually take?
A: 50-65 days for SBA 7(a) loans, 60-90 days for SBA 504 loans, from complete application to funding. We eliminate the most common delays through proper packaging and lender matching.
Q: Can I use SBA loans to buy out a partner?
A: Yes. Partner buyouts and ownership changes qualify for SBA 7(a) financing. Requirements vary based on whether remaining partners maintain same ownership percentages and operational roles.
Q: Does seller financing help my deal?
A: Yes. Seller financing on full standby can count toward 50% of your required equity injection. Sellers typically hold 5-10% of purchase price at 5-7% interest over 5-7 years, subordinated to SBA debt.
Q: Do I need collateral beyond the business assets?
A: SBA lenders require a security interest in all assets of the business being acquired. If business assets don't fully secure the loan, lenders may require additional collateral—but deals won't be declined solely for lack of collateral if cash flow adequately supports repayment.
Q: What credit score do I actually need?
A: Minimum 660 FICO, but 680-700+ significantly improves approval odds and pricing. Some lenders will consider 600-680 with strong compensating factors (high down payment, significant industry experience, strong cash flow).
Q: Can I acquire a business in a different state?
A: Yes. SBA acquisition loans work nationwide. We have lender relationships and CDC partners in all 50 states.
Ready to Acquire Your Next Business?
When you find the right acquisition opportunity, timing becomes critical. Having financing structured properly means you can move decisively while other buyers are still figuring out their capital strategy.
Three Ways to Get Started:
📞 Call Our Acquisition Specialists
(855) 998-5874
Available Monday-Friday, 9am-6pm EST
📝 Apply Online
Get preliminary assessment and lender options within 24-48 hours
⏱️ 24-Hour Response Time
We respond to all inquiries within one business day
About LVRG Business Funding
LVRG specializes in SBA acquisition financing, connecting qualified buyers with the nation's most capable SBA lenders. Over 20 years, we've facilitated over $1 billion in business financing for 10,000+ companies nationwide.
We understand acquisition dynamics, deal structuring, and what lenders actually look for in acquisition deals. Our mission: make acquisition financing accessible and successful for every qualified buyer.