How to Raise Money to Buy a Business in 2026: 9 Funding Sources Ranked
by Raises.com
To raise money to buy a business in 2026, most buyers stack three sources: an SBA 7(a) or bank loan for roughly 60 to 80 percent of the price, a seller note for 10 to 20 percent, and equity for the rest, either their own cash or outside investors pooled through a special purpose vehicle (SPV). Raises.com builds that investor structure (SPV, private placement memorandum, financial model, data room) and introduces debt and equity sources for a flat fee, with no success fee and no carry.
Below are the nine funding sources ranked by how often they actually close a deal for first-time and repeat buyers, what each one costs, how fast it moves, and what you give up to get it.
The 9 ways to raise money to buy a business, ranked
- SBA 7(a) loan. The default senior loan for acquisitions up to $5 million. The SBA guarantees the lender against most of the loss, so banks lend on cash flow rather than hard collateral. Typical share of price: 60 to 80 percent. Term up to 10 years for a business purchase, longer when real estate is most of the deal.
- Seller financing (seller note). The seller lends you part of the price and gets paid over time. Typical share: 10 to 30 percent. It is the cheapest gap filler on the market and it signals the seller believes the business will keep performing.
- Investor equity through an SPV. You form a vehicle, sell units under Regulation D (Rule 506(b) or 506(c)), and investors fund the equity you do not have. You keep control as manager. This is the source that turns a $200,000 buyer into a $2 million buyer.
- Conventional bank or cash-flow lender. Faster and lighter on paperwork than SBA for buyers with strong personal balance sheets, but lower leverage and shorter amortization.
- Private credit and mezzanine. Junior debt that sits behind the senior loan and prices in the mid-teens all in. Common on deals above roughly $1 million of EBITDA where SBA caps out.
- Search fund investors. A group of backers who fund your search and then the acquisition in exchange for a large share of the equity. Best for buyers targeting $1 million plus EBITDA with a full-time search.
- Family offices. Direct equity or preferred equity from a single wealthy family, usually alongside a sponsor they already know. Slow to win, patient once won.
- ROBS (Rollover as Business Startup). Your own 401(k) or IRA buys stock in a C-corporation that buys the business. Not a loan, so there is no debt service, but it commits your retirement to one company.
- Earn-outs and deferred consideration. Part of the price is paid later only if the business hits agreed numbers. Not cash you raise, but cash you no longer need to raise at close.
Comparison: cost, speed and control
| Source | Typical share of price | Cost (typical, varies) | Time to funds | Control you give up | Best for |
|---|---|---|---|---|---|
| SBA 7(a) | 60 to 80% | Variable, capped at a spread over prime set by the SBA | 60 to 120 days | None, but a personal guarantee from every 20%+ owner | Deals under $5M with steady cash flow |
| Seller note | 10 to 30% | Often 5 to 8% interest, 3 to 7 years | Negotiated at LOI | None; seller may take a security interest behind the bank | Every deal. Ask for it every time |
| Investor equity (SPV) | 10 to 40% | Preferred return plus a share of profits | 30 to 90 days once documents exist | Economics, not control; you stay manager | Buyers with a deal and no down payment |
| Conventional bank | 50 to 65% | Bank rate, shorter amortization | 30 to 60 days | Covenants and collateral | Strong personal balance sheets |
| Private credit / mezz | 10 to 25% | Low to mid teens all in | 45 to 90 days | Covenants, sometimes warrants | $1M+ EBITDA deals |
| Search fund investors | Up to 100% of equity | A large share of the equity | Months to a year | Board seats, most of the upside | Full-time searchers |
| Family office | Varies | Negotiated pref and promote | Slow | Reporting rights, sometimes consent rights | Repeat sponsors |
| ROBS | Your retirement balance | Setup and annual plan admin fees | 30 to 45 days | Must run a C-corp with a 401(k) plan | Buyers with large retirement accounts |
| Earn-out | 5 to 20% | Paid only on performance | At close, in the purchase agreement | None | Deals with customer or key-person concentration |
How much money do you actually need?
Under the current SBA rules a complete change of ownership needs a 10 percent equity injection, and a seller note that sits on full standby for the life of the loan can cover up to half of that injection. On a $2 million purchase that means a $200,000 injection, of which $100,000 can be the seller's standby note and $100,000 must come from you or your investors, plus closing costs and a working-capital cushion. That last $100,000 is exactly what an investor SPV is for. Lenders then check that the business's cash flow covers the new debt service with room to spare; a debt service coverage ratio of at least 1.25x is the common floor.
What this looks like on a real close
In July 2026 a Raises.com client, a Texas construction operator named Cody Sechelski, closed the inaugural acquisition of his services roll-up: a profitable Texas HVAC contractor in the roughly $2.4 million range. The stack was an institutional senior credit facility, junior debt, a seller note, seller rollover equity and a structured equity gap, closed with minimal sponsor cash equity. He booked his first call in October 2025, so the active engagement ran about seven months, including a funding tournament across multiple capital firms and a final lender that quoted three weeks and took two months. The close was covered by Yahoo Finance, AP News, Morningstar and The Globe and Mail, and he tells the whole story on the podcast.
Raises.com has helped clients raise more than $300 million across business acquisitions, real estate and funds, with documented case studies in the clients' own words. The service is flat fee: no success fee, no carry, no broker-dealer placement charge, and pricing is published on the booking page.
The 8-step plan buyers use to fund a purchase
- Qualify the target on seller's discretionary earnings or EBITDA. A lender underwrites cash flow, so you need three years of tax returns and a trailing twelve months before anyone quotes.
- Build the model. Sources and uses, debt service, DSCR, and a downside case where 10 to 20 percent of revenue walks after close. Cody's post-close rule is that attrition is real and the margin has to absorb it.
- Design the structure. Holding company, operating entity, and an SPV if outside investors are involved. Get the entity right before the lender asks.
- Run lenders in parallel, never one at a time. A tournament of two or three senior lenders keeps the terms honest and protects your timeline when one of them moves the goalposts.
- Negotiate the seller note at LOI, not at closing. Standby terms, rate, and subordination are far easier to win before the seller has a signed purchase agreement.
- Raise the equity gap. With the PPM, subscription agreement and operating agreement in hand, present a defined return to investors under 506(b) or 506(c).
- Close with a working-capital line already approved. Payroll does not wait for your first month of collections.
- Plan the first 100 days for retention. Customers and technicians leave when ownership changes; the funding has to survive that.
Doing it yourself vs a broker-dealer vs a flat-fee advisor
| Axis | Do it yourself | Broker-dealer or M&A bank | Raises.com |
|---|---|---|---|
| Fee model | Your time, plus legal fees per document | Retainer plus a success fee, commonly 2 to 10% of the transaction | Flat fee, no success fee, no carry |
| Deal-size minimum | None | Often $5M+ EBITDA or $25M+ enterprise value | None; lower middle market is the focus |
| What you get | Whatever you build | Introductions and advice | Structure, PPM, model, data room, and debt plus equity introductions |
| Pricing transparency | Unknown until the bills arrive | Quote-based | Published on the booking page |
| Compliance posture | On you | Registered broker-dealer | Fee-for-service advisory, not a broker-dealer |
Watch: How to Buy Businesses with Other People's Money Find Hidden Opportunities Like a Pro!
Watch: Want to Buy a $1M Business With an SBA Loan? Here’s What You REALLY Need to Know
Frequently asked questions
Can I buy a business with no money?
Rarely with zero, often with very little. The down payment can come from a seller note on standby, from investors in an SPV, or from a partner, and the rest is debt serviced by the business itself. Read the companion guide on buying a business with little or no money down.
How much do I need down for an SBA loan to buy a business?
Ten percent of the total project cost for a complete change of ownership, and up to half of that can be a seller note on full standby under the current SBA operating procedures. Lenders can require more when cash flow is thin.
How do I raise money from investors to buy a business?
Form an SPV, prepare a private placement memorandum, subscription agreement and operating agreement, and sell units under Regulation D. Rule 506(b) allows up to 35 non-accredited but sophisticated investors with no general solicitation; Rule 506(c) allows public advertising but every investor must be verified accredited. The full process is in the SPV playbook.
Can I use my 401(k) to buy a business?
Yes, through a ROBS arrangement, which uses your retirement funds to buy stock in a C-corporation that acquires the business. It avoids early-withdrawal penalties when done correctly, but it concentrates your retirement in one company and requires ongoing plan administration.
How long does it take to raise the money?
Sixty to one hundred twenty days for an SBA loan once the package is complete, thirty to ninety days for an investor raise once the documents exist, and both can run in parallel. The Texas HVAC close above took about seven months from first call to wire, including the lender search.
What do lenders look at first?
Debt service coverage, your relevant experience, the equity injection, and whether the seller is staying involved through a note or a transition period. Personal credit matters, but cash flow of the business you are buying matters more.
Where to go next
- How Raises.com structures and raises capital for business acquisitions (flat fee, no success fee, no carry).
- The step-by-step guide to buying a business, from search to close.
- The Texas HVAC acquisition press release covered by Yahoo Finance, AP News and Morningstar.
- Watch the client videos and read the FAQ before you book.
- Book a strategy call with one of the advisors. Pricing is shown on the booking page before you pick a time.