Your Guide For Getting A Loan To Buy A Business

As an entrepreneur, you’re always making decisions that position you for success, and one of the most significant choices you might make is considering a loan to buy a business. 

This often comes with many doubts and uncertainties. How do you ensure you end up with a loan that aligns with your long-term ambitions? How can you determine how much you need, and how can you ensure that the business you aim to acquire will not only sustain but flourish under you?

Let’s take a look.

Frequently Asked Questions (FAQ)

What types of loans are available for purchasing a business?

From the structured offerings of traditional banks to the bespoke solutions of loan companies, there's a range of options designed to meet your unique needs. Whether it's term loans or regional-specific options like SBA loans, each choice brings its own set of terms, rates, and criteria.

It’s also good to keep in mind what lenders are looking for: your creditworthiness, the financial robustness of the business you're eyeing, and its growth potential. A well-crafted business plan and a deep dive into the business's operations can not only bolster your application but also significantly improve your odds of landing a loan that's right for you.

We always suggest a thorough exploration of your options and, if needed, a chat with a financial advisor to make sure your next step is the right one. The right financing choice can make all the difference and set the stage for your business to thrive.

How do I determine how much money I need to borrow to buy a business? 

When you need a loan to buy a business, you need to think about how much of your own money you can use and how much you need to borrow. Most lenders expect buyers to contribute between 20% and 50% of the purchase financing from their own resources, as this demonstrates commitment and reduces the lender's risk. 

The next step is to thoroughly evaluate its financial records to determine profitability and capacity to generate enough cash flow to repay the business purchase loan. This assessment should include reviewing profit and loss statements, balance sheets, cash flow forecasts, and any existing debts the business may have.

Another prudent step when getting a loan to buy a business is to account for any immediate investments or operational costs you'll need to cover after the purchase. Planning for these expenses will help you request a loan amount that not only facilitates the acquisition but also supports the business's ongoing success.

Make sure that the amount you request for a loan to buy a business fits what you can realistically afford and what the business requires to thrive under your ownership.

Can I use a business acquisition loan to buy any type of business?

Business acquisition loans are designed to support the purchase of businesses across a spectrum of industries, tailored to meet the needs based on the lender's criteria, the business's financial health, and its potential for generating cash flow sufficient for loan repayment. Keep in mind that certain industries might be more challenging to finance due to various factors like risk assessment and regulatory considerations.

OnDeck, Your Financial Partner For What Comes Next

Taking a loan to buy a business also means considering the other stages once you've taken the leap into business ownership. 

At OnDeck, our unsecured business loans can complement your expansion strategies with a small business loan that can support operational scaling, especially for entrepreneurs who have recently acquired a business and are looking to invest in its operational growth and stability.

With a wide range of loan amounts, our finance loans are ideal for businesses seeking immediate financial support for various purposes. These may include stock purchases, vehicle acquisitions, marketing campaigns, or simply managing cash flow. 

The application process is streamlined, requiring only six months of recent business bank statements for Lightning Loans, or the most recent year’s accountant-prepared financials for larger loan amounts.

The Koala Score™ Advantage

The Koala Score™ is OnDeck’s proprietary credit assessment tool, which evaluates the personal credit scores of business owners in addition to analyzing business performance. 

This unique approach benefits newer enterprises, sole traders, and partnerships looking for new business loans by considering more than just traditional commercial data. With this feature, we are able to offer a more accessible funding route for businesses with less substantial financial histories.

Streamlining Your Path to Business Financing

Quick and Easy Application Process

OnDeck simplifies the loan application process, enabling businesses to check their credit score through the ‘Know Your Score’ tool. This tool allows for a risk-free credit score check that won’t impact your score, providing insight into your financial standing and eligibility for OnDeck’s financing solutions.

To apply for a loan, you need to present six months of business bank statement data, demonstrate healthy monthly revenue, and maintain a business credit score above 400. This helps us make sure you secure business loans that don’t put undue financial strain on you.

Lightning Fast Decisions and Funding

With OnDeck, decisions on loan applications can be made in as fast as thirty minutes, and funds can be transferred to your account in as little as two hours. It’s all part of our commitment to serve the urgent business financing needs of small businesses, facilitating growth or cash flow management without delay.

Empowering Australian Small Businesses with OnDeck

OnDeck is revolutionizing the way Australian small businesses access financing, offering quick business loans. With OnDeck, Australian small businesses have a reliable partner ready to support their growth every step of the way.

Once you've taken the helm of your new venture, OnDeck is ready to partner with you, offering the swift, straightforward funding solutions you need to ensure your business not only survives but thrives. 

Now that you’ve learned what you need for a loan to buy a business, let us be part of your success story, providing the support and resources to grow your newly acquired business with confidence.

Apply now and get access to business financing within twenty-four hours.

This article is for general information purposes only. Content may belong to or have originated from third parties, and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. OnDeck is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances. OnDeck is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly by the use of this website.