This guide from Aspenspring Business Loans in Durango, Colorado explains how business acquisition loans work for Colorado buyers: what partners require, how a price is set from earnings, how down payments and seller notes fit together, what due diligence covers, and how to check the payments, with an invented worked deal set against La Plata County, CO's 2,447 employers of 2023.
Can I Get a Business Loan to Buy an Existing Colorado Business From a Retiring Owner?
Yes, and an existing business gives a partner more to read than a new one, because it has records: tax returns, bank statements, a client list and a history of paying its bills. The loan is sized to what the business earns after paying the new owner a living, not to what the buyer hopes it will earn. La Plata County, CO had 757 employer establishments with 5 to 19 employees in 2023 (our arithmetic from County Business Patterns 2023), a size where a retiring owner's firm can come to market with a working team in place.
A term loan is the usual funding type; equipment in the sale can sit in an equipment loan, and stock in inventory financing.
Business Acquisition Loan Requirements a Partner Reads
- Three years of the business's tax returns and current-year profit and loss.
- The signed letter of intent: price, what is included, the closing date.
- The buyer's personal financial statement, credit and resume in the industry.
- The down payment, and where it comes from.
- Any seller note, and whether the seller will stay through a transition.
- The lease, and whether the landlord will assign it to the buyer.
- An equipment list and, where stock is included, a count valued at cost.
How heavily each item counts is the partner's call. A buyer with years in the same trade and a seller willing to stay for a transition both reduce the partner's uncertainty about whether the earnings will continue.
How Earnings Set the Price of a Small Business
Small businesses can be priced from seller's discretionary earnings, or SDE: profit before the owner's own pay, interest, depreciation and one-off costs. A multiple is applied to SDE, and the multiple depends on the trade, the size, how much the business depends on the seller, and the quality of the records. Illustration only, invented figures: a business with $210,000 of SDE priced at 2.6 times SDE costs $546,000 (our arithmetic).
The buyer's job is to check the SDE figure, line by line, against the tax returns. Add-backs the seller claims, such as a family member's salary or a one-time repair, should each be supported by a record.
A Worked Deal: Down Payment, Seller Note and Loan
Illustration only, invented figures: on the $546,000 price, the buyer puts 10% down, $54,600, and the seller carries 15%, $81,900, as a note at an invented 6% over 60 months. That leaves $409,500 for a partner to fund over 120 months at an invented 10% (our arithmetic).
| Piece | Amount | Monthly payment |
|---|---|---|
| Buyer's down payment | $54,600 | None |
| Seller note | $81,900 | $1,583 |
| Acquisition loan | $409,500 | $5,412 |
| Total | $546,000 | $6,995 |
Annual payments on the two debts come to $83,939. If the buyer takes $70,000 a year as their own pay, the remaining $140,000 of SDE covers the debt payments 1.67 times (our arithmetic). A partner sets its own threshold for that coverage figure.
Due Diligence Before Closing on a Colorado Business
- Match the tax returns to the bank deposits for the same years.
- Read every customer and supplier contract that will move to the buyer.
- Check the lease: term left, renewal options and assignment.
- Confirm the seller's entity is in good standing with the Colorado Secretary of State, and search for liens filed against the business's assets.
- Ask the Colorado Department of Revenue and the city about any sales tax the seller owes, since a buyer can inherit some tax obligations.
- Count and value any stock, and inspect equipment.
Small Business for Sale in Durango, CO: Reading the Listing
A listing gives an asking price, a headline earnings figure and a short description. The headline figure is the seller's, not a verified number; the returns and statements are where it is checked. Listings for professional firms, shops and trades all appear in La Plata County, CO, where construction counted 357 employer establishments, professional services 320 and retail 285 in 2023 (County Business Patterns 2023). A business licensed inside the city also needs its city license moved or reissued; the Durango, CO license guide covers that.
Business Acquisition Lenders and Where Each Fits
Banks and credit unions finance acquisitions for buyers with strong records and down payments; SBA-backed lenders offer programs for acquisitions through participating banks, which the SBA Colorado District Office can point to; this site does not arrange SBA loans. Specialty lenders and equipment funders can fund parts of a deal. Seller financing is a source in its own right.
The Colorado SBDC network lists a center serving Southwest Colorado, including La Plata County, CO, which offers advising on purchases; ask the center about any fees. When the structure is set, the online form or a call to (970) 238-5207 starts a request, and the comparison page explains the funding types.
By Aspenspring Business Loans · Updated