Thinking about buying a business? Smart move. In 2025 and heading into 2026, acquisition financing offers a strong path to growth. You skip startup risk and buy operations, staff, and revenue from day one. But you still need the right capital, structure, and market timing.
This detailed guide walks you through how it works, how lenders evaluate you, and what the U.S. market signals for 2026.
Acquisition financing refers to obtaining the necessary funds to purchase an existing business. Either buying the assets or the shares. It’s different from standard growth loans: lenders focus on the target business’s past performance, your plan going forward, and whether the purchase makes sense financially.
Why More Buyers Are Entering the Market in 2025-2026
Additionally, the market is aligning in favorable ways:
The U.S. M&A market is projected to rebound strongly in 2026. Analysts expect mid-market deals to recover as interest rates stabilize.
The OECD reports that financing costs for SMEs have been easing; for example, projected average interest rates are expected to trend toward 4% in early 2026.
Finance leaders identify acquisition readiness as a strategic priority in the 2026 transition.
So if you’re a buyer, you’re stepping into a window where deals could be more accessible, if you’re ready.
What Lenders Want, The Key Criteria (2026 Edition)
Next, lenders still ask the same big questions but with a fresh focus in 2026:
Cash flow of the target business: Is the earnings history strong? Are there recurring revenues? Lenders now expect digital-readiness and tech investment too.
Your experience and transition plan: Are you able to run the business? Can you integrate or improve operations?
Structure of the deal: Asset vs share purchase, liabilities inherited, real estate included — these all matter.
Financing mix and exit strategy: Lenders like to see that you aren’t over-leveraged and have a refinance or improvement plan.
Technology, digital assets, and ESG risks: In 2026, business-acquisition underwriting increasingly considers digital infrastructure and sustainability risks.
Here are three recent real-world acquisition finance stories that illustrate the landscape:
Manufacturing acquisition (2025): A buyer acquired a parts supplier and used a combination of bank term loan + seller financing. The target had five years of consistent EBITDA, and the buyer had relevant industry experience.
E-commerce brand buy-out (2025): An online business buyer acquired a niche retail brand. Financing included an asset purchase loan and an operating line.
Service business takeover (2026 outlook): A regional service firm structure used acquisition financing and planned to refinance into a longer-term bank loan once performance stabilized…illustrating the refinance strategy trend.
Note: While specific names are withheld, these are drawn from 2025 SMB acquisition reports.
Financing Options You’ll Encounter
When planning a business acquisition, you’ll likely evaluate:
SBA 7(a) or 504 Acquisition Loans: Great for buying businesses with good cash flow and assets as collateral.
Bank Term Loans: If you have strong credit and the business is lower risk.
Seller Financing & Earn-outs: Seller finances part of purchase; you repay over time, tied to business performance.
Mezzanine or Subordinated Debt: Higher cost but less dilution of ownership.
Alternative Lenders / Private Credit: Faster but higher cost, often useful if you need speed.
When Acquisition Financing Makes Sense, & When It Doesn’t
Use it when:
You’ve found a business with stable revenue (say >$500k).
You have experience or management capability in the business.
You have some down payment or other capital ready.
You’re buying because you want ownership and control, not starting from zero.
Avoid it when:
The target business revenue is unstable or has unknown liabilities.
You have no background or transition plan.
You lack capital for a down payment or contingency.
You are not ready to take on operations, staff, or risk of ownership.
Smart Tips to Improve Odds in 2026
Tighten your personal & business financials ahead of deal-search.
Understand the target business deeply: customers, operations, assets, technology.
Engage lenders early, ask what a bank in 2026 wants changed vs older deals.
Consider seller financing to improve your capital structure and show commitment.
Stay aware of the rate trend: with costs expected to ease in 2026, timing your application matters.
Final Thoughts
Buying a business in 2025-2026 is a strong growth strategy. You acquire something operating, with revenue, staff and value from day one. But still, you need the right financing, the right deal structure, and you need readiness.
If you’re serious, treat acquisition financing like a major project: plan carefully, build your team (accountant, lawyer, lender), study the business, and secure financing that fits your plan. Do that right, and you’ll buy a business that works for you instead of one you end up working for.
Chad Otar is the CEO at Lending Valley, a pioneer in the Fintech and alternative lending space. He has assisted thousands of business owners to receive funding over the last 10 years and is focused on helping one small business at a time achieve access to capital.
