Buy the business. We’ll structure the capital.
A competitor, a book of business, a partner’s stake, the building you operate from: acquisitions are won by buyers who arrive with a capital stack already designed around the deal.
Capital Source has been funding businesses since 2015 and manages over $500 million in active funding programs. We look beyond FICO, we carry no SIC-code restrictions, and acquisitions are where that structuring discipline earns its keep: no two purchases cash-flow the same way, so no two should be financed the same way.
What is acquisition financing?
Acquisition financing is capital structured to buy a business or its assets, typically combining a senior loan, seller financing, and an equity injection from the buyer. For decades the most traveled route has run through the Small Business Administration, whose guarantee on bank-issued loans makes expansion lending accessible to buyers who would struggle to borrow the full price conventionally. The guarantee opens the door; the deal itself, the target’s earnings, the buyer’s commitment, the structure holding it together, still has to carry the weight.
How does the capital stack work in a business acquisition?
Most acquisitions are funded by a stack, not a single loan. The senior layer, usually an SBA 7(a) loan or a conventional term loan, provides the largest share and holds the first claim. A seller note often sits behind it: the seller finances part of the price and gets paid over time, which bridges valuation gaps and keeps the person who knows the business best invested in your success. The buyer’s own equity completes the stack, and it does more than fill a gap. Lenders consistently view buyers more favorably when they invest their own resources in the purchase, because committed equity signals conviction. Get the layers proportioned correctly and the acquired cash flow services the debt with room to operate. That proportioning is the craft, and it is what we do.
Paths to funding a purchase
SBA 7(a) Loans
The general-purpose acquisition route. Per the SBA, 7(a) loans run up to $5 million, eligible uses include complete or partial changes of ownership, and maturities generally reach 10 years, or 25 for real estate. The workhorse for buying an operating business.
SBA 504 Loans
Built for fixed-asset-heavy acquisitions: owner-occupied real estate and long-life equipment. The typical structure pairs a third-party lender at about 50% with a Certified Development Company at up to 40%, with the borrower contributing at least 10%. It cannot fund working capital or inventory.
Conventional & Private Structures
When SBA eligibility, timelines, or caps don’t fit the deal, conventional term debt and private credit can be structured around it, including asset-based facilities where the collateral is real: receivables, inventory, equipment, or property inside the target.
Seller Financing
Less a product than a stack component. A seller note defers part of the price, aligns the seller’s incentives with the handoff, and can complement the equity you bring. Senior lenders often read a meaningful seller note as a vote of confidence in the business being sold.
One dated note for larger buyers: the SBA has announced that effective July 4, 2026, the cumulative 7(a) and 504 borrowing limit doubles to $10 million, which widens the SBA path for bigger acquisitions and multi-step buyers.
Capital structured around the purchase, not the template.
Tell us about the business you’re buying and we’ll map the stack: senior debt, seller note, equity, and the structure that ties them together.
Structure Your Acquisition Financing
Discuss Your Acquisition Plan
Who is acquisition financing for?
Buyers of every shape, at every stage of ownership. First-time owner-operators and search-fund-style acquirers buying their first company. Existing operators rolling up competitors or acquiring a book of business as a strategic add-on. Partners buying out partners, a change of ownership the SBA explicitly recognizes, whether complete or partial. And founders acquiring the building they occupy or the key equipment that wins the next contract, where a fixed-asset structure like the 504 earns its place.
What do lenders evaluate in an acquisition loan?
The deal and the operator, honestly weighed together. The target’s cash flow is what services the debt, so quality of earnings matters more than the asking price: lenders want revenue that survives the ownership change and margins that hold up under scrutiny. They weigh the buyer’s relevant experience and equity commitment, and collateral where the deal includes real assets. A strong operator can carry a thinner deal, and a strong deal can carry a newer operator, but the financing works best when both sides of that ledger are solid. We help you present both honestly.
How does the process work?
- Discuss the deal. Who you’re buying, why, and what the purchase needs to look like at close.
- Review and structure. We review the target’s financials with you and lay out the structures that fit, SBA and otherwise.
- Terms before commitment. Every term explained in plain language before you sign anything.
- Coordinated close. Funding timed to the transaction, so the capital and the keys change hands together.
Where SBA timelines or caps don’t fit the opportunity, private credit structures can be built around the acquisition itself. That is the difference a structuring firm makes: the program serves the deal, never the other way around. All financing is subject to underwriting, and we will tell you where you stand at every step.
Frequently asked questions
How much do I need to put down on a business acquisition?
It depends on the structure. SBA programs require a meaningful equity injection from the buyer, and the 504 program sets the borrower contribution at a minimum of 10% of the project. A seller note can complement the cash you bring, and lenders view buyers more favorably when they invest their own resources. We walk through the math for your specific deal before you commit to anything.
Can I use an SBA loan for a partial buyout?
Yes. The SBA’s eligible uses for 7(a) loans include changes of ownership that are complete or partial, which covers buying out a partner as well as buying an entire company. The buyout still has to make financial sense: the remaining ownership’s cash flow services the debt.
What do lenders evaluate in an acquisition loan?
The target’s cash flow and quality of earnings first, because that is what repays the loan. Then the buyer’s relevant experience, the equity being committed, and collateral where the deal includes real assets. Lenders underwrite the deal and the operator together, not one or the other.
How long does acquisition financing take?
It varies with the structure and the deal. SBA loans involve more documentation and review than most private structures, and the completeness of the target’s financials moves the timeline more than anything else. We will not promise a closing date no one controls, but we will tell you what is needed and where things stand at every step.
What if my deal doesn’t fit SBA guidelines?
Then we structure around it another way. Conventional term debt, asset-based facilities secured by the target’s receivables, inventory, equipment, or property, and private credit built around the acquisition are all on the table, and a seller note can take a larger role in the stack. The deal drives the structure, not the program.
The right acquisition deserves the right stack.
Bring us the deal you’re working on. We’ll review how the target performs, lay out the options in plain language, and structure the capital around the close.
See What Your Business May Qualify For
Plan the Capital Stack