Business Acquisition Loans: How Smart Entrepreneurs Finance Their Next Deal
Acquiring a company is no longer reserved for private equity giants — today’s operators and investors are using business acquisition loans to buy strong, cash-flowing businesses and build wealth faster than starting from scratch.
What Business Acquisition Loans Really Are
A business acquisition loan is capital designed to help entrepreneurs purchase existing companies. Unlike a traditional small business loan, this type of financing evaluates both you — the buyer — and the business being acquired.
Lenders focus on cash flow, debt service coverage (DSCR), and your operational experience. The right structure turns a good acquisition into a scalable investment, with leverage working in your favor.
The Core Financing Options in the Lower Middle Market
1. SBA 7(a) Acquisition Financing
- Up to $5 million in funding
- Typically 10–20% down
- Government-backed with long repayment terms
- Best for first-time buyers or smaller acquisitions
2. Conventional Bank Loans
- Senior debt secured by business assets
- Lower cost of capital, but stricter credit requirements
- Ideal for stable companies with tangible collateral
3. Private Credit and Alternative Lenders
- Non-bank lenders that move fast and structure creatively
- Flexible around personal guarantees and deal complexity
- Common in deals between $2M–$20M
4. Seller Financing
- The seller finances part of the purchase price
- Typically 10–30% of the total deal value
- Builds trust and alignment during the transition
Pro tip: Most successful deals combine two or more of these sources into a layered capital stack.
How Lenders Evaluate an Acquisition
Before approving a loan, lenders examine:
- EBITDA and Cash Flow Stability: Is there enough margin to service debt comfortably?
- Debt Service Coverage Ratio (DSCR): Typically 1.25x or higher.
- Management & Industry Experience: Proven operational skill reduces perceived risk.
- Equity Contribution: Even with creative structuring, lenders want to see 10–20% equity injection.
The takeaway: a strong deal narrative, clear cash-flow coverage, and a capable operator are more persuasive than perfect credit.
Why Structured Capital Beats Single-Source Lending
Most lower-middle-market transactions don’t fit neatly into one financing product. That’s why professional investors combine SBA, private credit, and seller notes to reduce equity exposure while maintaining liquidity post-close.
Structured financing doesn’t just close deals faster — it preserves optionality for growth, bolt-ons, and refinancing.
This is where Aparti Capital operates: at the intersection of institutional sophistication and entrepreneurial execution.
How Aparti Capital Helps Entrepreneurs Close With Confidence
At Aparti Capital, we advise on and arrange debt and private credit solutions for entrepreneurs acquiring companies in the $1M–$20M range.
We help you:
- Design the capital stack that fits your acquisition thesis.
- Run a competitive lender process to secure the best terms.
- Negotiate rate, covenants, and amortization for post-close flexibility.
Our approach is modern, data-driven, and built for speed — designed to help you move with the precision of an investment bank and the agility of an entrepreneur.
Ready to Finance Your Next Deal?
Start with a complimentary strategy call from Aparti Capital — and get a clear view of your financing options before you make your next move.
