Small Business Loans - A Starting Guide
- Joshua Rigden
- 6 days ago
- 5 min read
Acquiring an existing business is one of the most common reasons entrepreneurs seek small business financing—especially in Colorado, where the economy supports diverse industries like retail, services, and technology. Whether you’re buying into a proven operation or taking over a growing company, understanding your funding options is key to making a confident move.
1. Overview of Financing Options
The U.S. Small Business Administration (SBA) guarantees several types of loans designed to make business ownership more attainable. These programs reduce lender risk, often resulting in longer repayment terms and lower interest rates for borrowers. In addition to federal options, Colorado offers state-specific programs and partnerships with local banks and credit unions that serve small business owners across the state.
When evaluating financing for an acquisition, look for programs that explicitly support:
Business buyouts or succession plans
Working capital (to fund operations)
Equipment or inventory purchases
Real estate associated with the business
Most lenders will require:
A detailed business plan including acquisition details and financial projections
Strong personal and business credit (typically 620+ FICO)
Collateral or a personal guarantee
Proof that you can’t obtain conventional financing elsewhere
Interest rates are usually tied to the market—SBA loans, for example, often price at the prime rate plus 2–3%—and repayment terms can extend 10–25 years. Always consult your lender for personalized terms, as these evolve with market conditions.
2. Comparison of Common Loan Programs
Loan Program | Max Amount | Terms/Repayment | Interest Rates (Approx.) | Key Requirements | Best For |
SBA 7(a) Loan | $5.5M | Up to 25 years (10 for working capital) | Prime + 2.25–4.75% (variable/fixed) | For-profit U.S. business; 680+ FICO preferred; business plan/projections; 10–20% down; personal guarantee | Flexible acquisitions, including full or partial buyouts, real estate, or equipment |
SBA 504 Loan | $5.5M | 10–25 years (fixed) | ~5–6% effective | Similar to 7(a); must create/retain jobs; 10% down | Acquisitions involving real estate or heavy equipment |
SBA Microloan | $50K | Up to 6 years | 7–9% (variable) | Lower credit OK (500+); business plan required | Smaller acquisitions or startups in underserved areas |
Colorado Startup Loan Fund | $150K | 3–7 years | 6–10% (fixed/variable) | Underserved businesses (minority, women, rural); 620+ FICO; coaching required | Startups or rural business acquisitions |
CLIMBER Loan Fund | $500K | Up to 5 years | 5–8% (competitive) | Economic hardship documentation; stable pre-2020 finances | Recovery-focused acquisitions |
Business Term Loan (Local Bank/CU) | $5M+ | 1–15 years | Prime + 1–3% | 680+ FICO; collateral; 1–2 years business history preferred | General acquisitions through SBA or conventional routes |
3. Program Highlights
SBA 7(a) Loan
The most versatile SBA loan, ideal for business acquisitions that include working capital needs.
Requirements: Detailed business plan with valuation, personal financials, tax returns (2–3 years), collateral, and equity injection (10–20%).
Benefits: Long repayment terms and lower monthly payments help with cash-flow management.
How to Apply: Use the SBA Lender Match Tool or contact the Colorado SBA District Office (Denver, 303-844-2600)
Processing Time: 45–90 days.
SBA 504 Loan
Best suited for acquisitions involving commercial property or significant equipment.
Structure: 40% SBA, 50% bank, 10% borrower down.
Benefits: Fixed interest rates protect against rising rates; lower down payments than traditional real estate loans.
Apply Through: Certified Development Companies (CDCs) such as Colorado Lending Source or Community Banks of Colorado.
Processing Time: 60–90 days.
SBA Microloan
A good entry point for smaller purchases or startup expenses, especially if credit is limited.
Providers: Nonprofit intermediaries like Colorado Enterprise Fund or Access to Capital Colorado.
Benefits: Includes mentoring and training through the Colorado SBDC Network.
Credit Requirement: 500+ FICO often acceptable.
Processing Time: 2–6 weeks.
Colorado Startup Loan Fund
Designed for businesses in underserved or rural areas.
Administered by: Colorado Enterprise Fund.
Focus: Startups and acquisitions that create jobs or community benefit.
Processing Time: 30–60 days.
CLIMBER Loan Fund
A post-pandemic initiative offering working-capital support for existing businesses or acquisitions impacted by economic challenges.
How to Apply: Through the OEDIT CLIMBER Program.
Processing Time: Typically under 60 days.
4. Next Steps
Before pursuing any small business loan, it’s important to organize your financial picture and understand what lenders will look for. Taking a structured approach can help you secure better terms and move through the approval process more efficiently. Start by gathering accurate financial documentation, confirming your credit standing, and connecting with local resources that can guide you through available programs. With preparation, persistence, and support from Colorado’s SBA and SBDC networks, you can position your acquisition or startup for a strong financial start.
Assess Fit: Gather financial statements, tax returns, and a valuation of your target business (websites like BizBuySell.com are good for market comps).
Check Credit: Review personal and business credit reports via AnnualCreditReport.com.
Seek Guidance: The Colorado Small Business Development Center offers free, confidential advising, while SBA Colorado hosts educational webinars.
Compare Terms: Fees on SBA loans are typically capped at 3%, but always review each lender’s structure.
Prepare for Timeline: Expect 1–3 months for full approval and funding, depending on documentation and lender capacity.
Next Step:If you’re exploring the purchase of a small business, Rigden Capital Strategies can help you evaluate your financing options, model cash flow and repayment scenarios, and align your borrowing strategy with long-term financial goals. Schedule a conversation to discuss your business acquisition plan and determine the most efficient path forward.
Disclosure:This content is for informational and educational purposes only and should not be interpreted as financial, legal, or tax advice. Loan programs and terms may change without notice. Always verify current requirements with your lender or the U.S. Small Business Administration.
About Rigden Capital Strategies
Rigden Capital Strategies was founded on a simple belief: financial advice should be personal, transparent, and centered around your goals—not built on generic models or product-driven sales. With decades of combined industry experience, we’ve developed a process grounded in three core values: value, integrity, and progress.
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Disclosures
This article is provided for informational and educational purposes only. It should not be construed as personalized financial, investment, or legal advice. The information presented is based on current laws and regulations, which are subject to change. Past legislative or policy changes do not guarantee similar outcomes in the future. All loans involve risk, and borrowing decisions should be made after careful consideration of individual circumstances. Families may wish to consult with a qualified financial professional, tax advisor, or attorney before making any decisions.
