How to get a small business loan to buy an existing business
Buyers struggle to know what documentation banks require, from business plans to personal financial history, leaving them unsure how to present a viable application. This lack of clear direction makes it difficult to satisfy loan officers and resolve concerns over personal debt or asset ownership during a joint application.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
- 1brainstorming and weighing possibilitiesDid this help you?
- 2relying on family members to help out with costsDid this help you?
- 3doing initial research on the practical side of running the businessDid this help you?
- 4Relying on a partner's professional designation or stronger financial profile to carry the application and sign guarantees.Did this help you?
- 5Trying to stack multiple small business administration loans across household members to fund sequential business ventures.Did this help you?
- 6trying to analyze revenue, operating history, and use of fundsDid this help you?
- 7focusing on payment schedules matching cash flow rather than just looking at interest ratesDid this help you?
- 8Borrowing against a 401(k)Did this help you?
- 9Taking out a Home Equity Line of Credit (HELOC)Did this help you?
- 10seeking an investorDid this help you?
- 11taking out a traditional loan or SBA loanDid this help you?
- 12starting a new location from scratch instead of buying an existing oneDid this help you?
- 13dipping into retirement accounts like an IRADid this help you?
- 14borrowing against retirement accountsDid this help you?
- 15taking out a personal loan with a credit unionDid this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, each linked to the thread it came from.
“The issue is I don't have the money to just buy one outright, and I don't want to get a loan if I don't have to.”source ↗
“It seems impossible to buy a franchise absent liquid assets or a high net worth, and I's just trying to figure out how to stop having a near two hour commute each way five days a week.”source ↗
“I would love some advice on where to start when it comes to the purchase itself.”source ↗
“What ducks do I have to line up and in what formation for a bank to look at them and go "yeah, those ducks look like they're worth the investment" or something along those lines?”source ↗
“What do loan officers generally want to see when presented with a small business loan application of this sort? Fleshed-out business plan or just general facts and figures? My resumé of related experience?”source ↗
“I've been trying to understand the business financing landscape better and honestly there seem to be way too many options.”source ↗
“Confusing part is that two businesses can seemingly need the same $100k but have completely different financing options depending on revenue, how long they've been operating, what the money is for, and how quickly they need it.”source ↗
“My concern is whether my personal $10,000 debt and the fact that I don’t own a home could cause BMO to decline me individually even though we’re submitting a joint business application and my partner has stronger finances.”source ↗
“You don’t have enough money to afford buying in to be a principal. Becoming an equity principal is not something that just happens. Were you not saving for it?”source ↗
“So we are about 15k short of the down payment money.”source ↗
“We have 2 options borrow from my 401k or take a Heloc.”source ↗
“Which makes the most sense?”source ↗
“Should I dip into my IRA, borrow against it, or maybe take out a personal loan with my CU?”source ↗
Where this came up
People with this problem also raised
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- 8How to get business funding with no history
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- 5How to turn a business idea into reality with no money
- 7How to buy a small e-commerce business for under 20k
- 2How to avoid buying a 60-hour-a-week job instead of a business