What to Consider With Business Acquisition Loan

I’ve been in the banking and finance business for over 40 years. Over that time and then now as a business broker, I have seen a lot of businesses change hands. Most business sellers do not want to finance the transaction and risk getting the business back.  Most banks want to know that they can (and will) be paid back and have a plan to get whole if that does not happen. Thus, whether you are selling or buying a business, some important points to consider and remember when it comes to business acquisition loans are:

  • A good and positively trending business financial performance according to the business tax returns for the most recent few years is critical.
  • A selling price with an adequate down payment must show that a buyer can pay himself and pay the bank back based on the historical performance of the business.
  • An existing business model that suggests after the sale that good financial performance will continue for many years is essential.
  • A buyer that has the relative experience for that particular acquisition and a seller that will help in a smooth transition makes more deals successful.

These are just a few things to consider as you look at acquiring a business with a business loan from a bank or credit union. Give me a call if you’d like to talk about business selling or buying.


Roger Kerndt

The Business Brokers, Inc.


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