How to Buy a Business With No Money (and What "No Money" Really Means)

Search "how to buy a business with no money" and you'll find plenty of examples of buyers who have done it. But look at how those deals were financed, and you'll usually find a combination of seller financing, outside capital, and an SBA loan. Even when buyers don't put much cash into the purchase, they still need to meet certain financial and lending requirements.

There are several ways to structure an acquisition with limited cash upfront, but each comes with trade-offs. Below, we cover six common financing structures, the SBA rules that took effect in 2025 and 2026, a worked example with real numbers, and what to watch out for before committing to a deal.

The short answer

You can't buy a business with nothing. "No money" really means someone else's money (the seller's, a lender's, or an investor's) covers most of the price. To get there, you still need cash you can show the bank, solid credit, and a track record a lender will bet on. Lenders look for a strong credit score, few negative marks on your credit history, and a business background they can lean on. Since the SBA tightened its rules in 2025, the cash part matters even more.

Buyers keep their own cash low by combining:

1. Seller financing, where the owner lends you part of the purchase price

2. An SBA 7(a) loan, with part of the required down payment covered by a seller note on full standby

3. An earnout, where part of the price is paid later out of the business's performance

4. Equity partners or investors who supply the cash in exchange for ownership

5. Sweat equity or a work-to-own agreement with an owner who wants a successor

6. Asset-based or revenue-based financing, secured by the business's assets or repaid from its revenue

Most deals combine two or three of these. The lowest-cash deals usually pair a motivated seller with a business that has steady, documented cash flow.

Why "no money down" is harder than it used to be

Until recently, buyers could use seller financing to cover the full equity injection on an SBA-backed acquisition. The seller just had to agree to defer all payments for the first 24 months.

That option is no longer available. Under SBA SOP 50 10 8, effective June 1, 2025, and its update, SOP 50 10 8.1, effective October 1, 2026, buyers must meet three requirements when financing a complete change of ownership:

• Bring at least 10% of the total project cost. This includes the purchase price, working capital, and closing costs. For an initial acquisition, lenders can't waive the minimum.

• Put any seller note counted toward the injection on full standby. The seller can't receive principal or interest payments until the SBA loan is paid off.

• Cover at least half the injection with unrestricted funds. Seller debt on standby and other limited sources can cover no more than 50%. Under SOP 50 10 8.1, this category also includes minority investors who own less than 20% and have no control.

In practice, that means you need about 5% of the project cost from your own cash or another unrestricted source. You don't need to fund the entire 10% yourself, but you can't finance all of it through a seller note, either.

That's still a lower upfront cash requirement than the 20% to 30% conventional lenders often expect. But it does mean buyers need to think more carefully about where their equity injection will come from before pursuing an SBA-financed deal.

6 ways to buy a business with little money down

1. Seller financing

Seller financing is the backbone of nearly every low-cash acquisition. Instead of getting the full price at closing, the owner accepts a seller note: a loan you repay over time, usually from the business's profits, with interest.

Why would a seller agree? A few common reasons:

• They want to sell to someone who will look after their employees and customers, and the best candidate doesn't have a big check.

• Financing widens their buyer pool and can support a higher price.

• Collecting payments over several years can help with taxes, depending on how the sale is structured. (Their CPA will have opinions.)

• It signals confidence. A seller who won't finance any part of the deal is telling you something about how they see the business's future.

A deal that's 100% seller-financed is possible but rare. It usually happens with smaller businesses, owners who are ready to retire, and buyers who have earned the seller's trust, often an employee or manager. More often, a seller note covers a meaningful slice and works alongside a bank loan.

Take Brendan Feinberg's purchase of FloorCare Specialists, a gym-floor services company in Atlanta. The seller carried a note worth roughly 10% of the deal and rolled 5% of his equity into the new company. Brendan calls the note "almost an insurance policy" for the buyer and a signal to the bank that "this owner isn't hiding things." An SBA loan of roughly $2.5 million covered the bulk of the price.

What to negotiate: interest rate, term, any payment delay, whether the note is secured by the business's assets, and what happens if revenue drops. The more you lean on the seller's money, the more they'll want protections. Expect a personal guarantee.

2. An SBA 7(a) loan plus a standby seller note

The SBA 7(a) loan is the most common way people buy businesses in the $500K to $5M range. The SBA guarantees part of the loan, so lenders can offer longer terms (up to 10 years for a business acquisition without real estate) and lower down payments than a conventional loan.

To keep your own cash as low as possible under the current rules:

• Put half of the 10% injection in as a seller note on full standby for the life of the loan.

• Cover the other half with your own cash or other unrestricted funds.

• Finance the rest with the SBA loan.

Jimmy Feeman used this structure to buy Silver Creek Exteriors. The bank rejected his first seller financing plan, so he went back to the seller and restructured it:

"We asked for 5% of the deal size to be a separate seller-financed note, deferred for 10 years until the SBA note is paid off. That let it count as equity and made our down payment lower. That rule will change again. Staying current on SBA rules is genuinely hard."

You can also add a second seller note that isn't on standby. It won't count toward your injection, and the lender will include its payments when it checks whether the business's cash flow can cover all of its debt. But it can lower how much the SBA loan has to cover.

3. Earnouts

An earnout ties part of the purchase price to how the business performs after you take over. For example, you might pay $600K at closing plus up to $200K over two years if revenue stays above an agreed level.

For a buyer with limited cash, an earnout does two things. It lowers what you have to fund up front, and it shifts some of the risk back to the seller. If the business doesn't perform the way the seller said it would, you don't pay for performance that never happened.

Earnouts work best when the seller is confident about growth that hasn't shown up in the financials yet, like a big new contract or a recent price increase. Define the metric carefully. Revenue is harder to argue about than profit, because you'll control the expenses once you own the business.

4. Equity partners and investors

If you have operating skills but not capital, find someone who has capital but not the time or interest to run a business. That's the basic deal between you and an equity partner.

The options range from informal to institutional:

• Friends, family, or a former boss who invest in exchange for a minority stake

• Individual investors who back first-time buyers, often with a preferred return before profits are split

• A search fund, where investors pay your salary while you look for a business, then fund the acquisition. You earn a meaningful equity stake over time.

You pay for this money with ownership instead of interest. Giving up 30% to 70% of a business you run every day is a real tradeoff, so negotiate vesting, decision rights, and a buyout path up front. If you're also using an SBA loan, any investor who owns 20% or more must personally guarantee the loan, and investors who own less than 20% fall into the "limited" bucket described above.

5. Sweat equity and work-to-own deals

Some of the best low-cash deals never reach a public marketplace. They happen when an owner without an obvious successor meets a capable operator who's willing to earn their way in.

A work-to-own arrangement might look like this: you join as general manager at a reduced salary, earn equity each year based on performance, and get the right to buy the remaining shares at a set valuation later, often funded by the business's own profits.

These deals take patience and a lot of trust. They also give you something rare in acquisitions: years of firsthand knowledge of the business before you own all of it. Put the details in writing early, including the vesting schedule, the valuation method, and what happens if either side walks away.

6. Asset-based and revenue-based financing

If the business owns valuable equipment, vehicles, inventory, real estate, or steady receivables, lenders may loan against those assets. Equipment loans, receivables lines, and real estate mortgages can cover part of the price and reduce what you need from other sources.

This works best in asset-heavy industries like manufacturing, construction, distribution, and trucking. It's much less useful for service businesses whose value lives in relationships and processes.

Revenue-based financing can fill that gap for businesses with steady sales but few hard assets. A lender advances part of the purchase price, and the business repays it as a percentage of its monthly revenue, so payments rise and fall with sales. The loan sits on the business, not on the seller. Two catches: many revenue-based lenders still ask the buyer for a personal guarantee, and because the business repays it, it doesn't count toward an SBA equity injection. An SBA lender will treat it as debt and include its payments when checking whether the business can cover everything it owes.

A note on "creative" financing: You'll hear about using credit cards, home equity, or a Rollover as Business Startup (ROBS) to fund a purchase. These can work, but none of them are free money. A ROBS lets you use retirement savings without early-withdrawal penalties, and the IRS has flagged compliance concerns with these plans. Credit card and home equity debt put your personal finances directly on the line. Get professional advice before using any of them.

What a low-cash deal looks like: a worked example

Say you find a home services business with $350K in seller's discretionary earnings (SDE). You agree on a $1,000,000 price, and you need $100,000 for working capital and closing costs. That makes the total project cost $1,100,000.

In this structure, the seller has $165,000 riding on your success, and you bring about $55,000 to buy a business that earns $350K a year. An equity partner can supply some or all of that $55,000, but the lender will still review your credit, experience, and personal finances. Under SBA rules, a partner whose cash fills this slot generally needs to own at least 20%, which also means they personally guarantee the loan. You'll still owe the lender a personal guarantee, and the business has to earn enough to cover every payment and pay you a reasonable salary.

This example is for illustration only. Lender requirements, rates, and SBA rules vary. Confirm current terms with your lender.

Red flags in "no money down" deals

Low-cash deals are possible because someone else is taking a risk. Pay attention when nobody seems to mind.

• The seller will finance everything, no questions asked. Ask why. The business may be declining, carrying hidden liabilities, or harder to run than it looks.

• The numbers don't support the debt. If cash flow barely covers the loan payments, one bad quarter can sink you. Lenders typically want to see that cash flow comfortably exceeds debt payments, and so should you. Brendan's FloorCare deal carried about $380K a year in debt payments against roughly $700K in earnings, a coverage ratio near 1.8x. As he puts it: "You can't go to the seller and say I'll pay you 10 times earnings, because you could never underwrite that deal."

• The price is high to make up for flexible terms. Generous financing can hide an inflated valuation. Compare the price to real comparable sales before you agree to terms.

• The seller won't share clean financials. A seller who can't show you their records shouldn't expect you to take on their debt.

Final thoughts: where to find businesses that fit a low-cash strategy

The best candidates for low-cash deals tend to share a few traits: steady, documented cash flow, an owner who's ready to retire and cares who takes over, and a price that the business's earnings can support.

On Baton, every listing comes with standardized financials and a data-backed valuation, so you can quickly tell whether a business's cash flow can support a seller note or an SBA loan. One NDA covers every listing on the marketplace, and Baton advisors work with first-time buyers from first look to letter of intent (LOI). On average, Baton buyers find their deal in about 5.5 months.

Frequently asked questions

Can you really buy a business with no money down?

Not with zero resources. "No money down" usually means most of the price comes from someone else: the seller, a lender, or an investor. You'll still need cash you can show a lender, solid credit, and relevant experience. Under current SBA rules, an SBA-financed deal requires a 10% equity injection, and at least half of that has to come from your own cash or another unrestricted source.

How much money do I need to buy a business with an SBA loan?

For a complete change of ownership, the SBA requires an equity injection of at least 10% of total project cost. A full-standby seller note and certain minority investors can cover up to half of that, so plan on bringing about 5% from your own cash or other unrestricted sources.

Will a seller finance 100% of the purchase price?

Occasionally, usually for smaller businesses, retiring owners, or a buyer the seller already trusts, like an employee. Most seller-financed deals cover part of the price and pair the seller note with a bank or SBA loan.

What is the easiest business to buy with no money?

The easiest businesses to buy with little cash have steady, documented earnings, valuable assets that lenders will finance, and an owner who's motivated to sell and willing to carry a note. Service businesses with recurring revenue and owners ready to retire are often good candidates.

Is buying a business with no money a good idea?

It can be, if the business's cash flow comfortably covers all of its debt and still pays you a fair salary. Using more borrowed money means less room for error, so careful due diligence and a realistic price matter even more.