How to Buy a Business with a Loan in 7 Steps

1. Check YOUR Eligibility

Credit Scores – 680 or higher

Personal bank statements

Business / Personal Tax Returns – 3 Years

Financial statements for any other businesses

List of personal debts, including amounts owed, monthly payment and payoff date

Down payment 10% to 30% - Proof of Funds

Reach out to 3-5 Lenders

2. Search for a Business

Find Something

NDA, Get the CIM

It’s a nice business

Its Consistently Profitable

You like the SDE

You could see yourself doing it

3. From Broker/Seller, Ask for:

Income Statement 3 to 5 Years

Cash flow statement – (2) 10/21/21 & 10/21/22

Balance sheet – (2) 10/21/21 & 10/21/22

4. Does Business Qualify for Financing?

Is the business a Financially strong business

Debt Stress Test DSCR 1.2 to 1.5

Does the business have solid financials?

Is the business domiciled in the US?

How many years has business been in existence?

Has the business model product offerings changed?

5. From Seller, Ask for:

All Business bank account statements

Complete list of business assets

Information on outstanding business debts

Business lease

Organizational documents for the business; articles of incorporation

Business licenses

6. Buyer Submits to Lender

Business plan

Letter of Intent (LOI)

Cash flow projections

Professional business valuation

Financials - Quality of Earnings Report

Everything you asked from (Seller Financial Report Cards)

7. Lender Underwriting

Bank issues term sheet

Bank Performs Underwriting



Needs More

Bank issues commitment letter

Sign Purchase Agreement