What business acquisition financing is
Business acquisition financing is funding to buy an existing business or franchise — rather than build one from scratch. It lets you complete a purchase without putting up the full price in cash, and take over the business on solid footing. Because you’re buying a company that already has revenue, the financing leans heavily on the target’s cash flow to support repayment.
How it works
The deal is underwritten around the business you’re buying: its earnings, assets, customer base, and the price. You contribute a down payment or equity, and the financing covers the balance, repaid over a term the cash flow can support. A clear purchase agreement (or letter of intent) and clean financials for the target are central to getting a deal done.
Buying a franchise
Established franchises can be especially financeable: a proven model, brand, and unit-level performance make the outcome more predictable than an independent startup. Acquisition financing can fund the purchase of an existing franchise unit or the buy-in to a new one.
What it costs
Pricing is quoted as an interest rate over a term matched to the deal, and generally requires meaningful buyer equity. The key comparison is the cost of financing against the return the acquired business generates — a well-priced acquisition can more than cover its financing.
When it’s a good fit
- You’ve identified a business or franchise to buy and have a purchase price or LOI.
- The target has real cash flow and financials that support repayment.
- You can contribute a down payment and bring relevant experience.
Educational information only — not an eligibility decision. All funding and deal decisions are made by the lending partner.
Common questions
Can I get a loan to buy a business in Canada?
Yes. Business acquisition financing is designed exactly for this. Approval leans heavily on the target business's cash flow and financials — since that's what repays the loan — alongside your down payment and your experience. The lending partner makes the final decision.
How much of a down payment do I need?
Acquisition financing generally requires the buyer to contribute meaningful equity toward the purchase. The exact amount depends on the business, its cash flow and assets, and the lender. A larger contribution usually improves terms.
Does it cover buying a franchise?
Often, yes. Established franchise brands with a track record can be strong acquisition candidates, since the model and performance are more predictable. Requirements are set by the lending partner.
What documents are involved?
Typically the target's financial statements, the purchase agreement or letter of intent, your background and financials, and a business plan for the transition. A clear, well-supported deal moves fastest.