You don’t need tons of cash to buy your first business

Happy Thursday!

One of the biggest misconceptions I run into constantly is that buying a business requires a massive personal cash reserve.

I’ve built a portfolio of businesses generating over $850,000 a year in cash flow, and the majority of those deals were structured with very little of my own money at the table.

Not because I found some loophole, but because I understood how business acquisition financing actually works.

Here’s the reality most people never learn.

Community Spotlight

Kris bought a $2.6M oil field service company while keeping his full-time job at Chevron, and he’s now making $250K/year in passive income.

He went from knowing nothing to closing a multi-million dollar deal in 5 months.

👉 Want to learn exactly how to navigate lenders and close your first deal? Book a call with our team here.

The foundational tool: SBA 7(a) loans

The SBA loan program exists specifically to help people buy businesses with limited capital.

The structure is straightforward: the government backs the loan, which gives the bank confidence to lend at significantly higher leverage than they otherwise would.

In practice, that means a buyer typically only needs to bring 10% of the purchase price to close a deal, while the bank covers the remaining 90%.

Current SBA rates sit around 9-12%, depending on loan size and structure, which sounds high in isolation, but looks very different when the business you’re buying is returning 25-35% or more annually on your investment.

The cash flow from the business services the debt, not your personal income.

You can borrow up to $5 million through the SBA program, which covers the vast majority of small business acquisitions.

(In Acquisition Ace, members learn how to work with SBA lenders and structure deals that maximize leverage while minimizing personal capital at risk. If that sounds like something you’d like help with, book a call with our team here.)

Where creative financing comes in

The 10% down payment is where things get interesting.

Because the SBA covers 90%, the remaining 10% doesn’t necessarily have to come from your own bank account.

This is where creative financing strategies - seller notes, investor partnerships, working capital arrangements - open up real possibilities.

A seller note is an agreement where the seller finances a portion of the purchase price directly, rather than requiring all cash at close.

If that note is structured on full standby for a defined period, many lenders will count it as part of the buyer’s equity injection, which can reduce the personal cash you need to bring to zero.

Investor partnerships work similarly.

A silent partner contributes capital in exchange for a percentage of equity or a preferred return.

You do the work of finding and closing the deal, they provide the down payment, and both sides benefit.

The bottom line

Buying a business is all about understanding how to structure deals intelligently, and using tools that already exist to do it.

The SBA program was designed for exactly this purpose.

Seller financing is a standard negotiating tool, and investor partnerships happen in this space every day.

Most people don’t know any of this exists.

The ones who do have a significant advantage over everyone else who assumes they need to come to the table with hundreds of thousands of dollars before they can even start.

If you’d like to learn how to structure deals this way, the Acquisition Ace community is a great place to start, with 2,000+ members who are actively putting these strategies to work on real deals.

👉 Book a call with my team here to see if it’s right for you.