Business Acquisition Loan

Business Acquisition Loan Overview
A business acquisition loan is taken in order to buy a business. A business acquisition loan could be taken by an individual or a business entity. In the United States of America, the business acquisition loans are provided by lending institutions, like the Small Business Administration.

Business Acquisition Loan Uses
The business acquisition loans, provided by institutional lenders, like the Small Business Administration, are normally used for investing in physical assets like the following:
Inventory
Machinery
Furniture
Equipments
Fixtures

The business acquisition loans can also be used to make leasehold improvements. Business acquisition loans are also taken to buy out certain parts of a business.
In case of partnership companies, one partner can take a business acquisition loan to purchase the remaining portion of the business.

Business Acquisition Loan Criteria
In order to procure a business acquisition loan from any institutional lender, the particular borrower needs to have a decent credit record. He should also be able to have a primary knowledge of the business, that is being bought by him.

There are certain other conditions, that have to be fulfilled before a borrower can be approved for a business acquisition loan. They may be enumerated as below:

The buyer should have management experience in the line of business being acquired The business to be acquired must be profitable and should have sufficient historical cash flow to support the new debt

Business Acquisition Loan Terms
The business acquisition loans can be procured from the institutional lenders. However these lenders do not provide the total loan amount. Under normal circumstances, the borrowers have to pay a certain amount, of the necessary amount, by themselves.

The upper limit of the repayment period of the business acquisition loans is fixed by the particular lender . However, if a commercial real estate property has been bought with a business acquisition loan, then the term period of the loan could be extended.

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Last Updated on : 29th July 2013

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