I want to buy a business. How do I pay for it?

1. L1

   Very cheap or subsidised

   Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved.
   • Supplier and buyer-led finance

     Seller financing (when buying a business)

     When you buy a business, the seller lets you pay part of the price later, under a promissory note (a seller note). It can bridge the gap between your cash, a bank loan and the price, and it keeps the seller invested in the handover.

     MonthsPersonal guarantee likely
2. L2

   Mainstream secured debt

   Standard borrowing from banks, credit unions and mainstream lenders, often secured on assets or backed by a personal guarantee.
   • Own cash and no-cost

     Retirement savings in your business (ROBS)

     Moving retirement savings, without tax, into a new retirement plan that buys shares in your own new C corporation. It is your own money, but the IRS found most such businesses failed or were failing, and many owners lost their savings as well as the business.

     Weeks
   • Government-backed and community lending

     SBA 7(a) loans

     A business loan of up to $5 million from a bank or other lender, with part of it guaranteed by the SBA, for businesses that cannot get the credit they need on reasonable terms elsewhere.

     MonthsUp to $5mPersonal guarantee likely
   • Government-backed and community lending

     SBA Express loans

     A loan or line of credit of up to $500,000 from a bank or other lender with SBA Express authority. The lender decides under its own procedures and the SBA guarantees half, so there is less SBA paperwork than a standard 7(a) loan, but the same rate caps and the same rules on who can borrow.

     WeeksUp to $500kPersonal guarantee likely
   • Government-backed and community lending

     USDA Business and Industry loan guarantees

     A loan from a bank or other lender, with up to 85% guaranteed by USDA Rural Development, for businesses, cooperatives and others whose project is in a rural area. Up to $25 million, for up to 40 years, for buildings, equipment, buying a business and more.

     MonthsUp to $25m
   • Bank and mainstream debt

     Bank and credit union term loans

     A lump sum from a bank or credit union, repaid in fixed installments over an agreed term, usually one to five years. Usually cheaper than online lenders, but slower, and usually secured on assets with a personal guarantee.

     WeeksPersonal guarantee likely
3. L3

   Specialist secured debt

   Borrowing secured on specific assets such as invoices or inventory, with more fees and conditions than mainstream debt.
   • Asset-based and specialist lending

     Private credit and mezzanine debt

     Loans from lenders that are not banks, such as private credit funds, business development companies and SBA-licensed SBICs, to established mid-sized companies, often for growth, acquisitions or buyouts. Faster and more flexible than a bank, but at a higher price, and sometimes with a share of the company attached.

     MonthsFrom $250kMay give up shares
4. Equity rungs. These routes cost no interest, but you give up part of the ownership and control of your business. They are ranked by how much you give up, not by a made-up interest rate. Over time, equity can be the most expensive money of all.
   E2

   Significant dilution and investor rights

   Investors take a meaningful stake and usually get rights such as a board seat, a veto over big decisions, or a preferred return.
   • Private equity investment

     Family offices

     A company set up to manage one wealthy family's money invests directly in your business, usually for shares. Family offices can be more patient and flexible than funds, but each sets its own rules, and you usually need an introduction to reach one.

     6 months or moreGives up shares
5. E3

   Major dilution, loss of control or public obligations

   Investors take control, or the company becomes publicly traded and takes on ongoing public rules, costs and scrutiny.
   • Private equity investment

     Employee stock ownership plan (ESOP)

     Owners sell some or all of their shares to a retirement plan that holds them for the company's employees, usually paid for with a loan the company repays over time. A way for owners to sell, not a way for the business to raise money.

     6 months or moreGives up sharesNot a raise
   • Private equity investment

     Management buyout

     The people who run a business buy it, or a large part of it, from its owners, usually with a mix of their own money, loans, a note to the seller and sometimes a private equity investor. Owners can sell to people who know the business, but the business takes on the debt that pays for it.

     6 months or moreLoans, or shares if you choosePersonal guarantee likely
   • Private equity investment

     Private equity

     Investment from private equity funds in established, profitable companies, often buying control so the owners can sell some or all of their shares, sometimes paid for partly with money the company borrows. Large sums, at the cost of control and a sale on the fund's timetable.

     6 months or moreGives up shares

Sources

1. SBA: 7(a) loans · checked October 17, 2026
2. SBA: SOP 50 10 8.1, Lender and Development Company Loan Programs (effective October 1, 2026): change of ownership · checked October 17, 2026
3. IRS Publication 537 (2025): Installment Sales · checked October 17, 2026

Facts about each route are sourced on its own page.