Buying an existing business requires more than financing the headline purchase price. A buyer may also need cash for professional fees, inventory, equipment, licensing, deposits, repairs and working capital after closing. The financing structure must fit the target company’s verified cash flow, the buyer’s contribution and experience, the assets being acquired and the final purchase agreement. This guide explains how to build a complete acquisition budget, prepare for due diligence and compare potential funding paths without treating an initial estimate as an approval.
Calculate the complete acquisition need
Start with the proposed purchase price, then identify what the price includes. Separate real estate, equipment, inventory, customer lists, contracts, intellectual property, goodwill and other assets so the funding request reflects the actual transaction.
Add professional fees, appraisal or valuation costs, environmental or property reviews when applicable, licenses, insurance, deposits, repairs, technology changes, employee transition costs and a realistic working-capital reserve. A purchase can close successfully and still fail if the new owner begins without enough operating cash.
Show the expected source for every dollar: buyer cash, eligible financing, seller financing, investors or another documented source. Do not count future revenue, uncommitted funds or the same cash contribution twice.
Understand the transaction structure
An asset purchase generally transfers specified assets and agreed liabilities, while an equity or stock purchase transfers ownership of the entity. The structure can affect taxes, licenses, contracts, employees, liabilities, collateral and lender requirements.
The letter of intent and purchase agreement should clearly address price, deposit, assets, assumed obligations, working capital, inventory adjustments, seller representations, contingencies, closing conditions and the transition period.
Use qualified transaction counsel and tax professionals. CashMigo does not determine whether an asset or equity purchase is appropriate and does not provide legal, valuation, accounting or tax advice.
Tell CashMigo what the business needs, how much and how soon. We will review the request and help identify potential next steps.
Check My Funding Options →Verify cash flow and business value
Review several years of business tax returns and financial statements when available, plus current interim results, bank statements, sales reports, payroll, accounts receivable and payable, debt, leases and owner compensation. Reconcile reported revenue and earnings with reliable records.
Identify reasonable adjustments to seller-reported earnings and distinguish recurring performance from one-time items. Test customer concentration, supplier dependence, owner involvement, employee retention, seasonality, deferred maintenance and any revenue tied to contracts that may not transfer.
The U.S. Small Business Administration recommends determining what the business is worth before agreeing to a transaction and notes that buyers may use a qualified business appraiser. A lender or program may also require its own valuation or appraisal.
Compare potential acquisition funding paths
SBA 7(a) financing may support qualifying complete or partial changes of ownership. As of October 7, 2026, the SBA states that the general 7(a) maximum loan amount is $5 million, but the approved amount, borrower contribution, structure, collateral, guarantees and documents depend on current program rules, the lender and the transaction. Review the current SBA 7(a) program information and lender requirements.
A conventional business term loan may fit an established target and qualified buyer when cash flow, credit, collateral and the transaction meet the lender’s standards. Terms and required contributions vary.
Seller financing may bridge part of the price or align the seller with the transition, but payment terms, standby requirements, security, subordination and treatment by another lender must be documented. Equipment financing or commercial real estate financing may fund eligible assets separately when the overall structure permits.
Prepare the buyer and contribution
Providers may review the buyer’s credit, liquidity, management and industry experience, outside obligations, ownership structure, background, business plan and ability to operate the acquired company. A strong target does not replace the need for a qualified buyer.
Document the buyer contribution and its source. Cash, verified accounts, eligible gifts or other sources may be treated differently by a lender or program. Borrowed contributions and seller notes can be subject to specific conditions, so do not assume they will be accepted as equity.
Prepare a resume, personal financial information when securely requested, ownership details, formation documents, acquisition plan and explanation of how responsibilities will transfer from the seller to the buyer.
Protect post-closing working capital
Build a month-by-month forecast covering the first year after closing. Include conservative collections, payroll, rent, inventory, taxes, insurance, debt payments, owner compensation, maintenance, professional fees and one-time transition expenses.
Test a slower sales month, customer loss, delayed license, employee departure or unexpected repair. Debt service and essential operating expenses should remain supportable without relying on perfect results.
Confirm who keeps cash, receivables, deposits and payables at closing; how inventory is counted; and whether normal working capital is delivered with the business. These details belong in the transaction documents and can materially change the real amount required.
Prepare a complete acquisition file
Useful starting records may include the letter of intent or purchase agreement, buyer resume and ownership information, target-company tax returns and financial statements, interim results, debt schedule, bank statements, leases, asset lists, inventory, contracts, customer concentration, accounts receivable and payable, and a detailed sources-and-uses schedule.
Explain material changes, add-backs, owner-related expenses, pending litigation, tax obligations, licensing issues, liens, unusual deposits, related-party transactions and customer losses accurately. Incomplete or inconsistent information can delay or prevent a transaction.
Compare net proceeds, buyer contribution, seller financing, interest or other pricing, payment amount, term, collateral, guarantees, fees, prepayment treatment, covenants and closing conditions. Share only non-sensitive starting information through CashMigo’s 60 second funding check; use an approved secure channel for tax returns, identification, bank records and transaction documents.
Frequently asked questions
Can SBA financing be used to buy a business?
Potentially. SBA identifies complete and partial changes of ownership as eligible 7(a) uses, subject to current program rules, lender underwriting, eligibility, documentation and final approval.
Does the buyer always need a cash contribution?
Contribution requirements vary by program, lender, transaction size and structure. Buyers should document available cash and confirm how seller financing, investors or borrowed funds will be treated before relying on them.
Can seller financing be part of the acquisition?
Potentially. The seller note, payment schedule, standby or subordination terms, security and treatment by the senior lender must be documented and acceptable to the applicable provider.
What financial records may be requested?
Common records may include business tax returns, financial statements, interim results, bank statements, debt, leases, payroll, receivables, payables, asset and inventory lists, purchase documents and buyer financial information through a secure channel.
Can working capital be included with the purchase financing?
Potentially. The buyer should document the post-closing operating need and confirm permitted uses, amount and structure with the provider. Availability is not guaranteed.
How long does business acquisition financing take?
Timelines vary materially with the product, lender, transaction, valuation, due diligence, documentation, licensing and closing conditions. Do not commit to a closing date based only on an initial conversation or estimate.
