Maplepoint Funding Group, a small-business funding service in Muskegon, Michigan, explains how to get a business loan to buy an existing business in Michigan: acquisition loan requirements, what partners read about the business and the buyer, down payments and seller notes, how hard approval is and the steps from letter of intent to closing, with a worked example.
At a glance
- Product
Term loan, in some deals with a seller note
- Partners read
The business's returns and the buyer's position
- Example coverage
2.50 times (invented figures)
How an acquisition loan works when buying a Michigan business
An acquisition loan is a term loan used to buy a business, its assets or its ownership. The funder reads two things: the business being bought, through its tax returns and financial statements, and the buyer, through experience, credit and the cash they bring. The business's own cash flow is expected to cover the new loan payment with room left over.
Muskegon County had 3,147 employer establishments in 2023 (Census Bureau, County Business Patterns 2023). Buying one of them means taking on its records, its lease, its people and, depending on the structure, its liabilities. A payment calculator on this site runs the numbers for a given price.
Business Acquisition Loan Requirements: What Muskegon, MI Owners Should Know
| What a partner reads | Why |
|---|---|
| Three years of the business's tax returns | Shows what the business has actually earned |
| Year-to-date financial statements | Shows the current year is in line |
| The buyer's experience in the trade | Shows who will run it after closing |
| The buyer's down payment and personal finances | Shows the buyer has money at risk |
| The lease and its assignment terms | Shows the business can stay where it is |
| Letter of intent or purchase agreement | Shows the price and what it includes |
Each partner sets its own requirements, and not every partner reads all six the same way. These are the records to have ready.
Getting a Business Loan to Buy a Business Around Muskegon, MI
- Find the business and sign a confidentiality agreement to see its records.
- Read three years of returns and current statements; ask an accountant to check them.
- Agree the price, down payment, any seller note and what is included in a letter of intent.
- Confirm the landlord will assign or renew the lease.
- Call (231) 321-5041 or use the request form with the price and down payment.
- Answer the partner's questions, then read any offer in full.
- Close with an attorney who handles the purchase agreement and transfers.
How Hard Is It to Get a Business Acquisition Loan? What Muskegon, MI Owners Should Know
The difficulty depends on the business and the buyer more than on the loan. A request reads well when the business's returns show steady cash flow that covers the new payment with room to spare, the buyer has run a similar business or managed this one, the buyer brings a meaningful down payment, and the lease is secure. It reads poorly when the price rests on cash flow the returns do not show, the buyer is new to the trade, or the lease is about to end.
- Add-backs that cannot be documented
- A seller who will not provide returns
- A business that depends on the seller personally
- A lease with little time left and no renewal
- Large customer concentration
A worked acquisition example for a Muskegon County, MI business
Illustration only, invented figures: a buyer agrees a $560,000 price. The buyer brings 10% down, $56,000; the seller carries a 10% note, $56,000; and a funder lends the remaining $448,000 (our arithmetic).
| Piece | Amount | Term and rate (invented) | Monthly payment |
|---|---|---|---|
| Buyer's down payment | $56,000 | Paid at closing | None |
| Seller note | $56,000 | 60 months at 6% | $1,083 |
| Acquisition loan | $448,000 | 120 months at 10% | $5,920 |
The two payments total about $7,003 a month, or about $84,036 a year (our arithmetic). If the business's documented cash flow, after paying the buyer a reasonable salary, is $210,000 a year, that covers the payments about 2.50 times in this invented example. Partners each set their own coverage expectations.
How Do I Get a Business Loan to Buy an Existing Business: Questions to Settle Before You Borrow
- What exactly is included in the price: equipment, inventory, customer lists, the name?
- Is it an asset purchase or a purchase of the owner's shares?
- Does the seller stay on to introduce customers, and for how many months?
- Which licenses, permits and contracts transfer, and which must be applied for again?
- What working capital will the business need in the first months after closing?
The last question is the one buyers skip. A business changes hands with its receivables and payables in some state of flux; a working capital line or loan for the first months may sit beside the acquisition loan.
Michigan and Muskegon, MI records a buyer should check
- The business entity's status in Michigan's business registry
- State and city tax filings, including the Muskegon city income tax where it applies
- Local licenses and the certificate of occupancy
- Liens filed against the business's assets
- Employee and payroll records
The city income tax guide covers city filings, and the zoning and permit guide covers certificates of occupancy and open permits.
The resources page has the other guides, the Muskegon, MI figures page covers buying and leasing locally, and the product comparison places term loans among the six products.
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