21st Century Bank’s Summary to Buying a Business

Acquiring an existing business can be a great way to jump-start your entrepreneurial journey. While the process is significant and time-intensive, it can give you a head start with existing customers, established cash flow, and a proven operational model.

There are two main paths to becoming a business owner: building a startup from the ground up or buying an existing business. If you choose the latter, an experienced lender can help you find the right business for your unique situation and secure the funding you need.

At 21st Century Bank, we know this journey well—we started as a small business ourselves. As a locally-owned, family-run bank and a top Minnesota Small Business Administration (SBA) Preferred Lender, we’re dedicated to helping entrepreneurs navigate the SBA loan process.

Why Buy A Business?

Business acquisitions are a convenient bypass to the high-risk startup phase. You inherit a functioning operation with trained staff, a solid customer base and proven revenue, which gives you a strong foundation to grow from day one

Types of Business Acquisitions

• Asset Purchase – buying equipment, inventory and customer lists.
• Ownership Purchase – buying the whole business, including its contracts and liabilities.
• Merger – combining two companies into one entity.

Business Acquisition Steps

1. Pre-Qualify
2. Identify Business to Buy
3. Create a Business Plan
4. Negotiate a Purchase Price
5. Submit a Letter of Intent (LOI)
6. Complete Due Diligence (Due Diligence checklist) 
7. Package SBA Loan
8. Finalize the Deal & Close

Build Your Business Acquisition Advisory Team

You don’t have to navigate this alone. Work with trusted experts and advisors such as a banker, accountant, attorney, and insurance agent — especially those who intimately understand small business purchases.

Financing with an SBA Loan

SBA 7(a) and 504 loans provide buyers with lower down payments, longer repayment terms (often 10 years), and built-in working capital. 21st Century Bank’s SBA Lending Team helps you navigate the process efficiently. We will structure your deal and guide you through all documentation to get your loan approved.

What Banks Evaluate

• Cash & Credit – Most banks look for a 700+ credit score and sufficient savings for a 10% down payment.
• Experience – You need business acumen to prove you can run and grow the company.

Due Diligence & LOI Essentials

Before the deal closes, the bank verifies financials, evaluates risks, and confirms the business is a strategic fit. Your LOI outlines purchase terms, conditions to close and confidentiality agreements. If everything checks out, even after multiple rounds of due diligence, the process moves forward to closing.

Diving In: Business Acquisitions

For more detailed information on buying a business refer to Jon Dolphin article on acquiring a business – Part 1 and Part 2