Business loans are structured around the type of transaction being financed. The nature of the project, whether it involves starting a new business, expanding an existing operation, acquiring a company, or purchasing real estate, affects how a loan is structured, documented, and evaluated.

The sections below outline common loan transaction types. Understanding these transaction types helps borrowers set realistic expectations around requirements, structure, and timing before entering the loan process.

A startup generally refers to a business that has not yet begun operations or has been operating for a limited period without an established operating history. This can include a brand-new business or a new location, such as a restaurant, hotel, or medical center. Startups generally require an equity injection of 10% of the total project cost. Seller financing is not applicable.

A business expansion generally refers to an existing operating business that is growing its current operations. This can include opening an additional location, purchasing equipment, or completing leasehold improvements such as a building expansion. There is no equity injection requirement for business expansions. Seller financing is not applicable.

A business acquisition generally refers to the purchase of an existing operating business where the buyer acquires the assets or ownership interests of the company. Business acquisitions generally require an equity injection of 10% of the total project cost. Seller financing may be permitted for a portion of the equity injection.

Land purchase transactions generally require an equity injection of 10% of the total project cost. Seller financing may be permitted for a portion of the equity injection.

Building purchase transactions generally require an equity injection of 10% of the total project cost. Seller financing may be permitted for a portion of the equity injection.

A change of ownership refers to a transaction where ownership of an existing business shifts, either partially or in full. This can include situations where one or more owners buy out another owner, ownership percentages change, or new owners are introduced into the business. For a complete change of ownership, an equity injection is generally required and is typically calculated as 10% of the total project cost. For partial changes of ownership, equity injection requirements may vary depending on the structure of the transaction and the percentage of ownership being transferred. Seller financing may be permitted for a portion of the equity injection.

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