Using SBA Loans to Build or Grow Your Business through Acquisition

Acquiring another business is a quick way to scale your own. It can add predictable revenue streams, increase market share, and expand operations quickly.

The Small Business Administration (SBA) makes growing a business through acquisition more accessible than conventional financing. Using SBA loans to build or grow your business through acquisition supports long-term stability and could help your business thrive and become more efficient.

Benefits of Acquiring Another Business

Many business owners and investors focus on adding new products, reaching more customers, or entering new markets when they want to grow their business. These are good strategies, but using an SBA loan for a business acquisition presents a unique opportunity to elevate your company to the next level.

Acquiring a business may offer immediate access to additional profitable products or services, a built-in customer base, and established operations. The acquired business may have fully trained staff who want to stay on. This saves time, money, and stress by allowing businesses to skip the process of building from the ground up.

If two businesses are similar in size, type, and industry, they can combine resources. Sharing overhead costs can offer significant savings. For example, if a law firm acquires another law firm, it might make sense to lay off duplicate staff roles.

Aside from the financial benefits, acquisitions can also increase a company’s capabilities in other ways, such as expertise, talent, and valuable knowledge. Business owners may learn new ways of doing things from the company they acquire and implement those practices into their original operations. Expanding through acquisition opens the doors to new markets, customers, and products quickly.

The Process of Acquiring a Business

Some might think that acquiring a business is complicated or stressful. With the right help, it can be manageable and exciting. The first step is to identify the business type and industry that best fits your goals.

Once a business has been found, the next step is to conduct due diligence. This involves reviewing the company’s records, assets, liabilities, and contracts to determine whether the purchase should proceed.

Next, a purchase price will be negotiated along with the terms and conditions. When the SBA funds the loan, the business acquisition occurs. Finally, the new business is integrated as smoothly as possible.

How SBA Loans Make Business Acquisitions Accessible

One reason business owners may avoid acquisitions is the perceived inaccessibility and high cost. The SBA has various loan programs that help businesses finance their growth, including acquisitions.

The SBA 7(a) loan is the most popular program. It allows borrowers to receive loans of up to $5M for business acquisitions. The borrower can use the funds for the purchase price and other business expenses, such as working capital, equipment, and inventory.

SBA loans usually offer lower down payments and longer repayment periods than conventional financing. This opens the possibility for more businesses to acquire companies under favorable terms.

Utilize SBA Acquisition Financing To Grow With BFG

Using SBA loans to build or grow your business through acquisition could transform your company. By leveraging government-backed SBA loans, your business could expand with minimal risk. If you are looking to maximize your company’s growth potential, a business acquisition may be the perfect strategy, and an SBA loan could make it possible.

At Business Funding Group (BFG), we specialize in helping business owners secure SBA loans. With decades of experience, we have a wealth of knowledge concerning the process, requirements, and how to make a strong application.

Contact us for a 10–15-minute, no-obligation phone call to discuss your eligibility and the benefits of business acquisition.