The short answer: To buy a business, you (1) decide what kind of business fits you, (2) get pre-qualified for an SBA 7(a) loan so you know your budget, (3) find deals on marketplaces and off-market, (4) value the business on its cash flow, (5) sign a letter of intent, (6) run due diligence while your lender underwrites, and (7) close and take over. With SBA financing you can buy a cash-flowing business with as little as 10% down, and half of that can be a seller note. Start to finish usually takes six months to a year.
Buying a business is the most under-used wealth path in America. While everyone chases startups that mostly fail, roughly 2.3 to 3 million baby-boomer-owned businesses, holding an estimated $10 trillion in assets, are set to change hands this decade as their owners retire, and about half of those owners have no succession plan (Project Equity). That's the "silver tsunami," and it means there has never been a better time to buy a proven, profitable company instead of gambling on a new one.
This page is your map. Each section below summarizes one stage of the journey and points to the deep-dive guide, tool, or spoke where you can go further.
Your start-here path
1. Decide: buy vs build → 2. Know what it costs → 3. Find deals → 4. Value them → 5. Finance with SBA → 6. Do diligence & close → 7. Run it. New to all of this? Read top to bottom once, then use the links to go deep where you need it.
1. Why buy a business instead of starting one
The single biggest decision is whether to buy an existing business or build one from scratch. For most people, buying wins, and it isn't close. An established business hands you revenue on day one, existing customers, trained employees, suppliers, systems, and a financial track record. A startup gives you a hopeful idea and a very steep hill.
That track record is also why financing is possible at all. A bank will lend against a business that has three years of tax returns proving it makes money. It will almost never lend to fund an unproven startup, because there's nothing to underwrite. When you buy, the business's own cash flow largely pays back the loan you used to acquire it.
You're not buying a job. You're buying a machine that already prints cash, and using the bank's money to do it.
The trade-offs are real: buying takes more cash up front than bootstrapping a side hustle, and you inherit whatever the previous owner built, warts and all. But the failure math is lopsided. Read the honest comparisons before you commit: buying vs starting a business, buying vs a franchise, and the blunt gut-check, is buying a business worth it?
2. What it actually costs
The number one myth is that you need to be rich to buy a business. You don't, you need a down payment and reserves. With an SBA 7(a) loan, the minimum equity injection is 10% of the project, and up to half of that can come from a seller note on full standby. On top of the down payment, budget for closing costs, working capital, and a personal cash reserve.
Here's what the real cash requirement looks like at two common deal sizes:
| Cost | $350k business | $1M business | Notes |
|---|---|---|---|
| Purchase price | $350,000 | $1,000,000 | Median small business sells near $350k |
| Equity injection (10%) | $35,000 | $100,000 | Up to half can be a standby seller note |
| Est. closing costs & fees | $12,000 | $32,000 | SBA guarantee fee, legal, appraisal, often financed |
| Working-capital cushion | $10,000 | $25,000 | Can often be built into the loan |
| Realistic cash needed* | $45k, $60k | $110k, $150k | *Less if a standby seller note covers part of the 10% |
So the honest floor for a median deal is roughly $45,000, $60,000 of your own cash, often less with the right deal structure. Go deep on the math in how much money do you need to buy a business, and find your ceiling with the max purchase price calculator.
You don't need the full sticker price in cash
On a $350,000 business the bank funds up to 90%. Your job is the down payment plus reserves, not the whole price. That's the leverage that makes buying a business accessible on a normal income.
3. Find businesses for sale
You can't buy what you can't find, and the best deals are rarely the ones sitting at the top of a marketplace. Deal flow comes from two places: on-market listings (BizBuySell, broker networks, industry-specific sites) and off-market outreach (contacting owners directly before they list). Off-market is more work, but it's where you avoid bidding wars and find owners who care about legacy over price.
Whatever the source, you're screening for the same traits: steady cash flow, a customer base that isn't dependent on the seller, clean-enough books, and a reason for selling that isn't "the business is dying." Learn the sourcing playbook, marketplaces, broker relationships, outreach scripts, and reading a listing for red flags, in the finding businesses for sale hub. When you're ready to narrow in on what to actually target, see the best businesses to buy in 2026 and the case for boring businesses.
4. Value the business
Small businesses are priced on a multiple of their earnings, not on revenue or hope. The two numbers that matter are SDE (Seller's Discretionary Earnings, profit plus the owner's salary and perks added back) for smaller owner-operated businesses, and EBITDA for larger ones. You multiply that earnings figure by an industry multiple to get a price.
According to the BizBuySell Insight Report, the median small business sells for about 2.7× SDE, on roughly $165,000 of median cash flow. But multiples vary widely by industry:
| Industry | Typical SDE multiple |
|---|---|
| Car wash | ~4.7× |
| Laundromat | ~4.1× |
| HVAC / home services | ~2.8× |
| Restaurant | ~2.3× |
| Overall small-business average | ~2.5× |
Getting the valuation right protects you from overpaying and keeps the deal financeable, a bank won't lend on a price the cash flow can't support. Learn how to normalize earnings, verify add-backs, and set your offer in the valuation hub, and get a ballpark instantly with the business valuation calculator.
5. Finance it with an SBA loan
For most first-time buyers, the SBA 7(a) loan is the engine that makes the whole thing possible. It's a bank loan partially guaranteed by the U.S. Small Business Administration, which is why lenders will fund up to 90% of an acquisition for someone who has never owned a business.
The essentials, current for 2026:
- 10% minimum down, up to 90% financed; half the down payment can be a standby seller note.
- 10-year term for a business (up to 25 years when real estate is included), which keeps payments manageable.
- Rates around 9.5%, 11.75%, tied to WSJ Prime (6.75% in July 2026) plus a lender spread.
- The deal must clear a DSCR of about 1.15×, 1.25×, the business's cash flow has to comfortably cover the loan payment.
Here's how the money stacks up on a typical deal:
| Source | Amount | % of price | Notes |
|---|---|---|---|
| SBA 7(a) bank loan | $900,000 | 90% | Up to 10-yr term, ~10.5% rate |
| Your cash injection | $50,000 | 5% | Minimum half of the 10% injection |
| Seller note (full standby) | $50,000 | 5% | Counts toward the injection if on standby |
| Total | $1,000,000 | 100% | Plus working capital & fees, often financed |
Model your own numbers with the SBA loan calculator and pressure-test the coverage with the DSCR calculator. Financing is where deals are won and lost, the full playbook lives in the SBA loans pillar.
6. Due diligence, offer & closing
Once you've found a business you want, you make a formal offer with a letter of intent (LOI), a mostly non-binding agreement on price and terms that starts the clock. Signing the LOI kicks off due diligence: the period where you verify that everything the seller told you is true.
Diligence means confirming the financials (often with a quality-of-earnings review), checking customer concentration, reviewing contracts and leases, and making sure there are no legal or tax skeletons. Three workstreams now run in parallel, and each takes real time: your due diligence, your SBA lender's underwriting (appraisal, business valuation, final approval), and the legal drafting and negotiation of the definitive purchase agreement, plus disclosure schedules and any seller-note or escrow documents. That last one is easy to underestimate: lawyers trading redlines on the purchase agreement can add weeks, so start it early rather than treating it as a rubber stamp at the end. If diligence turns up problems, you renegotiate the price or walk. If it checks out, you sign the purchase agreement and close, wiring your down payment and taking the keys.
This is the stage where a rushed buyer gets burned, so slow down and verify. The full checklists, LOIs, diligence, quality of earnings, purchase agreements, and closing day, are in the closing & due diligence hub. And study the first-time buyer mistakes before you write an offer.
Never skip quality of earnings
The seller's numbers are a story until you verify them. A quality-of-earnings review confirms the cash flow is real and sustainable, the single most valuable thing you can do before wiring money.
7. The first 90 days
Closing is the starting line, not the finish. The first 90 days of ownership set the tone for everything. Your priorities: keep the existing team (they run the business), reassure customers and suppliers that nothing's breaking, learn the operation before you change it, and protect cash flow. The classic first-timer error is charging in to "fix" things in week one, resist it.
Most successful buyers spend their first quarter listening, documenting how things actually work, and building trust with the people who were there before them. Then they improve. The playbook for the transition, announcing to employees, retention, and the 90-day plan, is in the after you buy hub.
How long does the whole thing take?
Realistically, plan on six months to about a year from starting your search to sitting at the closing table. Finding the right business is the slow, unpredictable part. Once you're under a signed LOI, diligence and SBA underwriting typically run 60 to 90 days. See the full stage-by-stage breakdown in how long does it take to buy a business.
Go deeper: the buyer's library
Every question a first-time buyer asks, answered in depth. Start with what's nagging you.
Money & the decision
Timeline, pitfalls & what to buy
The three hubs you'll use most
Once you know the process, these are where the real work happens.
Frequently asked questions
With an SBA 7(a) loan you need a minimum 10% equity injection, and up to half of that can be a seller note on standby. On a $350,000 business, plan for roughly $35,000 down plus $15,000, $30,000 for closing costs, working capital, and reserves, so most buyers need $45,000, $60,000 of real cash. See how much money you need.
Buying gives you day-one revenue, customers, staff, and a track record a bank will finance. Startups have no cash flow, high failure rates, and no collateral to lend against. For most people, buying is the lower-risk path, see buying vs starting.
Usually six months to a year. Finding the right deal is the slow part; once you're under a signed LOI, diligence and SBA underwriting take about 60 to 90 days. See the full timeline.
You don't need to have owned a business, but SBA lenders want relevant management or industry experience. Transferable skills like sales, operations, or leadership count, and buying a business with a strong existing team lowers the bar.
Simple, established, cash-flowing businesses in essential industries, home services, cleaning, laundromats, HVAC, with recurring revenue and a stable customer base. Avoid turnarounds and seller-dependent businesses. See boring businesses.
Sources
- Market pricing, median sale price and cash flow, SDE multiples, BizBuySell Insight Report (2026).
- "Silver tsunami" business-transition estimates, Project Equity.
- SBA 7(a) program terms, down payment, and rate structure, sba.gov 7(a) program; SOP 50 10 8.
