For most small business loans, a lender will review factors like your credit history, time in business, and revenue to determine if you qualify. If you’re buying a business or franchise, your lender will look at slightly different criteria to ensure that you’re investing in a viable business, and in turn, can repay the loan.
Be prepared for these specific application requirements for a business acquisition loan:
Credit review: Lenders look at both your business credit report and the personal credit reports of any partners with a minimum 20% ownership stake.
Revenue and debt: To ensure your business can handle the payments of your new acquisition loan, the lender reviews both your revenue and total debt payments.
Minimum down payment: Some types of loans allow for a business acquisition with no money down. But others (particularly term loans) require a down payment, usually ranging between 10% and 15% of the loan principal.
Business plan: Most lenders require an explanation of how you intend to use the funds to purchase a business and expand your existing operations.