Looking to Buy a Business? Let’s Talk Funding Options

Chicago, Illinois
Buying & Selling Small Businesses
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Looking to Buy a Business? Let’s Talk Funding Options

Nicholas FloydBusiness Member
NY · Member since 2026 · 351 posts · 109 votes

One thing I’ve noticed is that finding a profitable business to purchase is one challenge, but getting the financing together can be a completely different story.

A lot of entrepreneurs don’t realize how many business funding options are available or how much their business structure can affect their financing opportunities.

I’m Nick with 850Floyd Financial, and I specialize in helping entrepreneurs, investors, and business owners access capital.

Depending on qualifications, I offer access to several funding options, including:

* SBA 7(a) loans for eligible business acquisitions
* Traditional business loans
* Business lines of credit
* 0% APR business credit cards with introductory periods of 6–12 months
* Revenue-based funding
* Startup business funding

I also have access to aged shelf corporations, which can be particularly useful for entrepreneurs whose LLCs don’t meet certain business age requirements.

Here’s why that matters.

Some financing programs have minimum business age requirements. Having access to an older, properly structured corporation may help with eligibility for certain funding opportunities that a newly formed LLC wouldn't qualify for.

Depending on the lender and the applicant’s overall financial profile, this could potentially expand access to financing options with higher funding limits.

However, the corporation’s age alone doesn’t guarantee larger approvals. Lenders may also evaluate actual operating history, revenue, ownership changes, personal credit, and other underwriting requirements.

For entrepreneurs seeking substantial capital, understanding these requirements before applying can make a big difference.

I also enjoy connecting with business brokers, accountants, and other professionals who regularly work with entrepreneurs looking to buy or expand businesses.

I’m curious about something.

For those looking to purchase an existing business or expand their current one, what’s been your biggest obstacle: finding the right opportunity, meeting lender requirements, or securing enough capital?

I’d be interested in hearing everyone’s experiences.

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  • Arnav Chopra
    Member since 2026 · 6 posts · 0 votes
    1w

    To simply answer your question: I believe for many first-time franchise buyers, the major barrier to obtaining financing is meeting lending requirements. More specifically, if there are no solid numbers available before a buyer submits their loan application, the process of finding a lender to fund them becomes much longer and more difficult. A few things make the process less complicated:

    1. Verify that the specific brand being considered is listed in the SBA's Franchise Directory. The SBA reinstated its Franchise Directory effective June 1, 2025, and franchisees of brands that are not listed cannot receive SBA-guaranteed loans. Before investing too much time on an application, verify the franchisor is included in the Directory.

    2. Learn about the franchisor's own requirements. In addition to what a lender requires, many franchisors require potential franchise owners to have minimum levels of liquid capital and net worth before they will consider approving them. If you don't meet those requirements, the issue of financing doesn't matter until you do.

    3. Create your budget based upon the Franchise Disclosure Document (FDD), which franchisors are required to provide under the FTC Franchise Rule, and not on any sales pitches made by representatives of the franchisor. Specifically:

    Item 7 outlines the total start-up costs associated with opening a franchise, which includes additional funds needed as initial working capital. Many first-time franchise buyers fail to include these expenses when preparing their budget and run out of money during their first several months in operation, resulting in potential failure.

    Items 5 and 6 outline the upfront fees and ongoing fees associated with the franchise. Fees such as royalties and advertising fees are usually expressed as a percent of gross sales. As a result, regardless of whether or not you are generating profits yet, these fees must be paid each month.

    Item 19 lists the franchisor's financial performance data, if the franchisor discloses it. Lenders often compare an applicant's projections with the figures contained in Item 19, so any projections significantly higher than Item 19 will likely be scrutinized.

    Item 20 contains statistics regarding openings, closures and transfers for the previous three years. A lender who reviews a franchise with high closure rates may review your application more closely.

    1. Match the type of financing to what it's paying for. Typically, long-term costs such as building out and/or equipping facilities should be financed using long-term options, such as SBA 7(a) loans. Conversely, short-term financing alternatives, such as credit cards or revenue-based financing, are very costly if they are used to finance costs that could take years to repay.

    2. Anticipate contributing some of your personal funds to finance your franchise. For example, to qualify for an SBA 7(a) loan, an applicant is typically expected to contribute at least 10% of their own funds. Additionally, lenders want evidence that the business's projected cash flow is sufficient to comfortably support timely loan payments.

    Getting these numbers solid before applying for financing does not ensure that your loan application will be approved; however, having these numbers will allow you to have a shorter and more productive discussion with a lender.

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