Not all businesses have the capacity to purchase another business or company. They need some support in the form of financing to avail potential small business acquisitions. There are numerous ways through which you can look for financing opportunities and avail these finances to purchase, operate, and manage the newly acquired business.

Some of the most common and widely used sources are mentioned below in this article for you. These can be used individually or in combination with others to finance the purchase of the possible business acquisition.

Personal Funds

One of the simplest ways to finance a business acquisition is to use your personal funds. You can use your excess cash, savings, home equity, and cash out any stocks or options you have to acquire the business you want to. These may prove to be beneficial for the purchase of the business but after the purchase, you might need to look for financing options that can help run the operations of the newly acquired business. Therefore, this should not be considered as the sole financing avenue available to you.

Seller Financing

This might sound somewhat impossible but this is possible in the world of business and financing. You can ask your seller, whose business you are buying, to provide you with a loan that will be amortized over a period of time. This financing is usually provided after the seller has done all the due diligence required by them on you, and is mostly available readily as compared to some conventional financing source.

It may seem like a lucrative financing option, but being wholly dependent on it is not a possibility as the percentage of the purchase price that the seller is willing to finance varies from 40% to 60%.

Bank Loan

This financing avenue is only available to those who have existing assets and can present formally prepared financial statements for the past 3 to 5 years of their business. It is not readily available to those that only have a business plan laid out on paper.

SBA Loan

Because of the unavailability of conventional loans to small business owners who want to acquire some other business, SBA loans are the best option for them. Although these loans are also provided by banks they have a guarantee from the SBA regarding the loan. This guarantee basically serves as an underwriting for the bank for risky loans. These loans usually have minimum qualification guidelines but there might be new guidelines added to it by the bank as it finds appropriate.

Leveraged Buyout

This type of financing allows buyers to maximize their returns with as little investment in the business as possible. It works for both, large companies and small businesses, by maximizing external financing through the use of equipment financing, real estate financing, and various other kinds of loans.