Positioning your business for growth through an acquisition or merger is a great way to secure a larger presence in the marketplace. However, business acquisitions take ample funding, both to go through with the transaction, and to maintain regular operations during the transition period. In many cases, businesses will use acquisition loans to purchase the other company and its assets.
What are the Advantages of Using a Business Acquisition Loan?
A business that uses an acquisition loan to purchase another successful company can bypass the challenges of opening a new location from scratch. Business acquisitions also allow you to gain equipment, projects, technology, and highly skilled teams in the process. Additionally, if you are acquiring a business that has a successful brand, you will also capture their customer base, thus increasing your revenue. In short, business acquisition loans are a great fit for companies that are looking for rapid growth.
Business Acquisition Loan Options
There are a number of paths businesses can take when financing an acquisition, including:
- SBA Loans: For small businesses looking to expand their operations, SBA 7a and 504 loans can be used to financing acquisitions. SBA loans offer competitive rates and terms, and can be processed quickly with the right lender.
- Asset-Based Lending: Asset-based lending – or ABL – is a way for a business to leverage existing assets, such as receivables, equipment, and property, to secure the capital necessary for an acquisition.
- Joint Venture Capital: Businesses may seek outside investors who are willing to finance an acquisition based on the potential for growth, as well as the overall profitability after the transaction.
- Commercial Financing: Commercial financing offers a wide range of solutions that can be arranged faster than traditional loans, so businesses can act on time-sensitive opportunities, such as acquisitions. Commercial financing solutions can also be tailored to the size and scope of the acquisition, providing analyses of things many traditional lenders overlook.
Get Your Business Acquisition Financed
Golden Century Lending provides customized solutions for business acquisitions across all industries. To learn more, contact our offices today.