Business Acquisition Loan Calculator: Payment on a Business Purchase
Work out the monthly payment and total interest on a loan used to buy an existing small business — the financing structure most acquirers use to take over a going concern.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year amortization schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Monthly payment | Total interest | Total of payments |
|---|---|---|---|
| $500k · 9% · 10-year | $6,333.79 | $260,054.64 | $760,054.64 |
| $200k · 10% · 7-year | $3,320.24 | $78,899.89 | $278,899.89 |
| $2M · 8.5% · 10-year (SBA) | $24,797.14 | $975,656.53 | $2,975,656.53 |
| $80k · 12% · 5-year | $1,779.56 | $26,773.35 | $106,773.35 |
How This Calculator Works
Enter the acquisition loan amount (purchase price minus down payment and seller financing), the APR, and the term. The calculator turns the APR into one constant monthly payment using the amortization formula and shows total interest across the loan.
The Formula
Fixed-Rate Amortization
P = loan amount, r = monthly rate (APR ÷ 12), n = number of monthly payments
Worked Example
A $500,000 acquisition loan at 9% APR over 10 years gives a monthly payment of about $6,334. Total repayments come to roughly $760,000, so interest adds about $260,000 across the life of the loan. The debt service has to come out of the acquired business's cash flow — making accurate due diligence on EBITDA critical.
Key Insight
Business acquisition loans are underwritten primarily against the cash flow of the target business, not the buyer's personal income. SBA 7(a) loans up to $5M dominate the small-business acquisition market because they require only 10% down (sometimes lower with seller financing), allow 10-year terms, and accept goodwill as collateral — terms no conventional bank typically matches. The trade-off is slower underwriting and a personal guarantee that survives the deal.
The SBA 7(a) acquisition standard
SBA 7(a) loans are the most common acquisition financing structure for U.S. small business purchases $250K-$5M. Key features: 10-year term; ~10% borrower equity contribution required; SBA guarantee 75-85% of loan reducing lender's risk; rates Prime + 2.25-2.75% (~10.75-11.25% as of 2024); first-time SBA borrowers qualifying.
Typical structure for $1M acquisition: $750K SBA 7(a) loan (Prime + 2.5%); $150K seller note (financed by seller at 6-8%); $100K buyer cash contribution (10% equity). Total deal structure produces leveraged purchase with manageable monthly payments and reduced cash requirement.
SBA qualification: business being acquired must show sufficient cash flow to service debt (typically 1.25× DSCR including buyer salary); buyer must have relevant experience or transition plan; collateral typically includes business assets and personal guarantee (no exception for limited liability).
Seller financing — the deal-enabler
Seller financing (seller takes promissory note for portion of purchase price) is critical for many business acquisitions. Typical structure: 10-25% of purchase price as seller note; 5-10 year amortization at 6-10% interest; subordinated to senior bank/SBA debt; sometimes with earn-out features tied to business performance.
Why sellers offer financing: (1) DEAL COMPLETION — many buyers can't qualify for full bank/SBA financing of purchase price; seller note bridges the gap; (2) HIGHER PRICE — financing typically commands 10-25% price premium vs all-cash deals; (3) TAX EFFICIENCY — installment sale treatment spreads gain over multiple years.
Why buyers value it: (1) DEAL ENABLEMENT — without seller financing, many deals don't happen; (2) LOWER CASH REQUIREMENT — preserves buyer working capital; (3) SELLER ALIGNMENT — seller retains interest in business success during transition. For buyers, negotiating seller financing as part of deal structure typically produces better outcome than insisting on all-cash.
Business acquisition financing structure — typical $1M deal
Reference financing structure for typical $1M business acquisition.
| Component | Typical amount | % of price | Rate |
|---|---|---|---|
| SBA 7(a) senior debt | $650K-$750K | 65-75% | Prime + 2.25-2.75% (~10.75-11.25%) |
| Seller note (subordinated) | $100K-$200K | 10-20% | 6-10% |
| Buyer equity / cash | $100K-$150K | 10-15% | n/a (equity) |
| Working capital line | $50K-$150K (additional) | Beyond purchase | 9-13% |
| TOTAL DEAL STRUCTURE | $1M (purchase) + WC line | 100% |
Working capital line is in addition to purchase price — provides operating buffer during transition. Combined monthly debt service typically $9K-$12K on $1M acquisition with this structure. Business EBITDA of $300K+ typically required for SBA approval to demonstrate sufficient debt service coverage (1.25× DSCR including buyer salary).
Frequently Asked Questions
How does SBA 7(a) financing differ from conventional?
SBA 7(a) loans up to $5M require only 10% down (sometimes less with seller carry), allow 10-year terms, and accept goodwill as collateral. Conventional acquisition loans require 25%+ down, run 5 to 7 years, and want hard collateral.
What is required for down payment?
SBA 7(a) requires 10% minimum from buyer (sometimes structured with 5% buyer plus 5% seller carry). Conventional acquisition lenders want 25% to 30% down. The down payment must be 'cash equity' — not borrowed from a third party.
Is seller financing typical?
Common — often 10% to 25% of the purchase price as a seller-carry note subordinate to the bank debt. It signals seller confidence in the business and can lower the buyer's bank loan requirement.
What rate should I expect?
SBA 7(a) acquisition loans typically price at prime + 2.25 to 2.75 — currently ~10% to 11%. Conventional small-business acquisition loans often 9% to 14%. Stronger personal credit and cash-flow coverage lower the rate.
What about working capital?
Most lenders require additional working capital lined up at closing — typically 3 to 6 months of operating expenses on top of the loan amount. Running out of working capital in month 4 is the most common reason early-stage acquirers fail.
When is this calculator unreliable?
When ignoring seller financing or earn-out components (most acquisitions have multiple debt sources at different rates and terms), when working capital line is treated as separate from acquisition (lenders often require working capital line alongside acquisition loan), or when buyer salary requirement isn't factored into debt service analysis (SBA lenders typically require buyer's reasonable salary to be included in cash flow analysis).
References & Authoritative Sources
- U.S. Small Business Administration (SBA) — 7(a) Loan Program — Acquisitions · consulted June 1, 2026 · SBA acquisition financing rules and rates
- International Business Brokers Association (IBBA) — Quarterly Market Pulse Reports · consulted June 1, 2026 · Industry data on U.S. small business sales
- BizBuySell — Annual Insight Reports · consulted June 1, 2026 · Industry source for U.S. small business transactions
Related Calculators
Data Sources & Benchmarks
This calculator draws on 2 independent, dated sources. The starting values for interest rate are taken from the benchmarks below and refresh whenever the snapshots are updated.
Methodology & Review
Business acquisition loan payment uses standard amortization formula on purchase financing. The calculator returns monthly payment. U.S. business acquisition financing 2024: SBA 7(a) at 8-13% APR for 10-year amortization (most common for small business acquisitions $250K-$5M); conventional bank acquisition loans 7-12% for similar deals; seller financing 6-10% for portion of purchase price (typically 10-25% with 5-10 year amortization); equity capital for portions not covered by debt. RELIABILITY: Reliable for amortization calculation. Less reliable as complete cost picture because acquisition financing involves multiple components: senior debt (SBA or bank), seller financing, earnouts/contingent payments, equity contribution, and working capital reserves. Total acquisition cost structure rarely captured in single payment calculation.
Updated