Small Business Acquisition Loans

Small business acquisitions could be a great way to expand your business. You have better products and services than your competitor; you manage your business more efficiently; or you know your customers the best, and have the know-how to serve them better than any other competitors.

You may also look to acquire a business and be opportunistic. The owner of the business you are looking to acquire may be looking to retire; the business may be in financial distress not because there is no demand for its products and services, but simply because it has been mismanaged; maybe you are looking to acquire proven employees of your competitor and the employees’ relationships to your customers; or, you may look to consolidate a fragmented market so you can have better negotiating power over your vendors.

Finally, there is also a concept of “time to market”. Sure, you may try to build your own sales force, invest in technology, or build a new store at a new location. But this comes at a price – time. As a small business owner, you know that your time is very important and managing it well will make or break your business. So depending on the valuation of a business you are looking to acquire, it may actually make more sense to buy what you are looking for than building your own.

Whatever the reason to acquire, many businesses overlook the option to acquire because of lack of access to capital. Most traditional banks are reluctant to provide small business loans to acquire other companies because they often look to the health of the business you are thinking of buying. Here’s the catch: if the business you are looking to buy is profitable, the acquisition price likely reflects a significant amount of goodwill (difference between price and “liquidation value”), which traditional banks have no interest in financing. If the business is unprofitable, traditional banks will be hesitant even if the “liquidation value” of the business is higher than the purchase price.

Worse, traditional banks require years of financial statements of both companies, partnership agreements and review of ownership structure, and details about collateral. In many cases, traditional banks also require you to have a strong credit history and require an equity injection (ask you to put in your own equity capital). Through traditional banks, the loan application process generally takes at least 1 month, and oftentimes much longer. This drains your time and focus, which is running businesses, not dealing with more paperwork!

Instead, our XPRS Business Acquisition Loans have flexible terms with a simple application process. We focus on the cash flow of your existing business and less on your credit score. Most importantly, we have fast business loans and can process your application in as little as 1 business day – often times your ability to close a deal at a good price comes down to being opportunistic and taking action to secure financing quickly.

If you are ready to move forward and join the many businesses that have grown with us, click here.