Loans to buy a retiring business

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Did you know that there are millions of business owners in the U.S. approaching retirement age? It’s called the ‘Silver Tsunami,’ and with it, a growing number are looking to exit their companies and pass them on. For aspiring entrepreneurs or businesses looking to expand, this presents a unique opportunity: acquiring an existing business with a proven track record, a loyal customer base, and an operational infrastructure already in place.

But while the opportunity is clear, the cost of acquisition often isn’t small. That’s where loans to buy a retiring business come into play. With the right financing, you can take over a business for sale by an owner retiring without tying up your personal capital or putting undue stress on your company’s cash flow.

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Can you use a loan to buy a retiring business?

Yes, you can use a loan to purchase a business from a retiring owner. In fact, acquisition financing is one of the most common ways buyers secure the capital needed for this type of deal.

Most lenders recognize the value of acquiring an established business, especially if it has consistent revenue, long-standing clients, and a transition plan in place. Loans can be used to fund the full purchase price or to supplement a combination of cash, seller financing, and investment capital.

In many cases, sellers are willing to negotiate flexible terms or remain involved during the transition, making the business more appealing to lenders.

What types of loans are available to buy a retiring business?

Several financing options are available to help you buy a retiring business. Each has specific requirements and advantages depending on your timeline, budget, and credit profile.

SBA 7(a) loans – Backed by the Small Business Administration, SBA Loans are among the most popular options for business acquisitions. They offer favorable interest rates and long repayment terms but require strong financials and a detailed business plan.
Term loans – A traditional loan that provides a lump sum for the purchase. Term Loans are typically available through banks or online lenders and can be used when you have solid credit and financials.
Seller financing – In many deals, the retiring owner agrees to finance a portion of the sale. You’ll repay them over time, often with flexible terms. This is commonly used alongside other loan options.
Asset-based lending – If the business being acquired has valuable assets like equipment, property, or inventory, those can sometimes be used as collateral to secure a loan.

Revenue-based financing – For businesses with predictable cash flow, the revenue-based option allows repayments to be tied to monthly revenue. It’s generally faster to access but can be more expensive over time.

What are the benefits of buying a retiring business?

Buying a business from a retiring owner gives you a head start; it’s like a cheat code to business ownership. Instead of building from scratch, you’re taking over a company that’s already operational. This can reduce startup risks and shorten the path to profitability.

Some benefits include:

An existing customer base and revenue stream
Trained staff, operational systems, and brand recognition
Easier to secure financing with an established financial history
Opportunity to improve or modernize operations under new leadership
Potential for seller support during the transition.

Especially in local or specialized industries, acquiring a retiring business can also preserve jobs and community relationships that have been built over decades.

What are the pros and cons of buying a retiring business?

There are several factors to consider before taking on an acquisition. While the benefits can be significant, it’s important to understand the potential risks and limitations.

Pros

Immediate cash flow – You’re stepping into a business that’s already generating income, which helps with loan repayments and stability.
Established infrastructure – Systems, supplier relationships, and a trained team are often already in place.
Brand equity – Long-standing businesses often come with a good reputation, which takes time to build from scratch.

Growth potential – With fresh leadership and modern tools, you may unlock new opportunities the previous owner hadn’t pursued.

Cons

Upfront cost – Even with financing, acquisition requires capital for down payments, legal fees, and due diligence.
Legacy issues – Inherited problems—like outdated systems, poor documentation, or staff turnover—can complicate the transition.
Cultural fit – You may need to make changes to the team or business model, which can create friction early on.
Dependence on the owner – Some businesses rely heavily on the retiring owner’s personal relationships or expertise, which can be hard to replace.

Evaluating the business thoroughly before buying is essential to avoid surprises after the handover.

How to apply for acquisition finance

Applying for a loan to acquire a business takes planning and clear documentation. Most lenders will want to see that the deal makes financial sense and that you have the ability to lead the business successfully.

Step 1: Identify the target business

Have a specific business in mind and begin conversations with the owner. Request access to financial records, customer contracts, lease agreements, and other relevant details.

Step 2: Perform due diligence

Hire an accountant and possibly a legal advisor to verify the business’s performance, liabilities, and risks. This helps you avoid overpaying or overlooking red flags.

Step 3: Build a business plan

Even if the business is already established, lenders will want to see your plans for operations, leadership, marketing, and growth. Show how you intend to maintain or improve profitability.

Step 4: Prepare financial documents

You’ll need your own financial records, including tax returns, credit reports, and any personal or business financial statements. If you’re applying for an SBA loan, be prepared for more documentation.

Step 5: Compare financing options

Look at lenders who specialize in acquisition finance. A platform like Swoop can help you compare offers based on loan size, rates, and repayment terms.

Step 6: Submit your application

Once your documents are in order, apply with your chosen lender. The approval process can take several weeks, especially for SBA loans, so plan accordingly.

How to find a retiring business for sale

There’s growing opportunity in the “silver tsunami” of business owners retiring over the next decade. But finding the right business takes time.

Start by exploring these sources:

Business-for-sale platforms – Websites like BizBuySell, LoopNet, and others often include a filter for retirement-based sales.
Industry-specific networks – Trade associations and local chambers of commerce may know of owners looking to exit.
Franchise resale programs – Some franchise networks support the resale of existing units from retiring operators.
Professional advisors – Accountants, lawyers, and brokers often hear first when a client is preparing to sell.
Local outreach – In some cases, a direct approach can open doors. If there’s a local business you admire, ask if succession plans are in place.

Look for businesses with a clear transition timeline, clean financials, and a seller open to a collaborative handover.

How to use a loan to buy a retiring business

Once your loan is approved, the funds can be used in several ways, depending on the deal structure. Common uses include:

Paying the purchase price (or a portion of it) to the seller
Covering legal and broker fees associated with the transaction
Funding improvements or changes post-acquisition
Supporting working capital during the first few months of transition

Many loans are disbursed at closing, ensuring the seller receives payment as agreed and you gain full operational control. In deals with seller financing, your loan may only cover part of the price, with the rest structured as monthly installments to the former owner.

Get started with Swoop

Buying a business from a retiring owner can be one of the most rewarding paths to entrepreneurship—but it requires the right financial foundation. Swoop makes it easier to find and secure the funding you need.

With access to SBA lenders, acquisition specialists, and flexible loan structures, Swoop helps you compare your options and move forward with confidence.