There are many ways to cover the costs of a business acquisition. One that few owners consider is asset-backed financing.

Many banks and credit unions offer asset-backed loans to people willing to leverage their new or current business’s assets. Often, business buyers will finance their inventory, machinery, non-mortgaged real estate, or other tangible assets to access this fast form of funding.

Why would I choose this approach over another form of financing?

You might consider an asset-backed loan to cover the costs of an acquisition in any of these circumstances:

• You'll need more capital than what you can attain from other sources.
• You don’t qualify for a traditional term loan.
• You don’t want to put up personal assets as collateral for financing.
• The business you’re buying—or the business you already own—has assets you could leverage to achieve your funding goals.

It's often easier to meet lenders' requirements for asset-backed loans than for traditional term loans. Many will consider your financial history and personal creditworthiness. But often, they’re far more interested in the value of your business assets, which they can use as collateral if you default on the loan.

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