A buyer in Denver moved on a software company doing $3M in annual recurring revenue — profitable, renewing, customers who had already decided to keep paying. The first three lenders he called asked the same question: what's the collateral? There was no building. No inventory. Equipment that amounted to laptops. A customer list he couldn't pledge and contracts he couldn't foreclose on. Every bank classified the purchase price as goodwill and either declined or offered a fraction against everything he owned.
A $5M SaaS acquisition funded in 10 days on the recurring revenue itself is what it looks like when the lender prices the contracts instead of looking for a building. And the pattern is not a software problem. It is the problem with buying almost every business worth buying.
Operators in Colorado and everywhere else hit this the moment the target is a service business, a practice, or anything that runs in leased space. The best acquisitions are asset-light by design. The lenders most buyers call first are asset-heavy by design. Those two facts are the whole story of a loan to buy a business.
acquired with zero physical collateral — the recurring revenue was the collateral
— Illustrative funded scenario, anonymized — see the case study
What a Bank Calls Goodwill Is What You're Actually Buying
Here is the mismatch in plain terms. A bank's acquisition loan form has lines for real estate, equipment, inventory, and receivables. It has a line for goodwill, and the policy manual caps what the bank will lend against it — often at a multiple that makes the loan useless for a business whose value is its customers.
Now look at what a buyer is actually purchasing in a software company, an agency, a dental practice, or a three-location repair chain: a stream of revenue from customers who have already chosen the business. Renewal contracts. A recall schedule. A fleet account that pays net-30 like clockwork. That is more predictable than most of what a bank does lend against — a restaurant's Friday receipts, a contractor's next bid — but it lands on the form as goodwill, gets a haircut, and the gap becomes the buyer's problem to cover in cash.
Business acquisition financing that underwrites revenue reads the thing being bought for what it is. Contracted ARR with a renewal history. A practice's collections. Combined deposits across every location. The revenue is the collateral. It simply isn't the kind a bank knows how to appraise.
Bottom line:
Goodwill is the bank's word for the part of the business that makes money. Revenue-based acquisition financing prices that part directly — and it is the only structure that reaches the full purchase price on a business with nothing to appraise.
The Buyer Gets Underwritten Too — and That's the Advantage
Most buyers assume the target's financials carry the transaction. They carry half of it. The other half is the buyer: existing revenue, deposit history, and a track record in the same trade. A software operator buying customers they already know how to serve, a producing dentist buying a second group, a shop owner buying three more bays — each is a fundamentally different credit than a first-time buyer with a business plan, and each is priced accordingly.
That is why the acquirer's cash flow qualifies the deal, not the target's. A $1.8M dental practice acquisition funded in 8 days was underwritten on the buying dentist's collections, not the retiring seller's tax returns. A $1.5M three-shop repair chain funded in 8 days was underwritten on the combined deposits of all four shops the buyer would own the day after close. A bank does the opposite — it studies the seller's books, orders a valuation, and lands on a timeline the seller cannot wait for.
Why "No Collateral" Deals Are Usually the Fastest to Fund
There is nothing to appraise. No real estate to inspect, no environmental report, no equipment to inventory. A clean data room — the target's revenue by customer, the buyer's bank statements, a signed letter of intent — and a lender that reads revenue can fund in days. The same transaction at a bank is still in committee a quarter later, waiting on a valuation of goodwill it has already decided not to lend against.
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See What You Qualify For →Three Layers, Not One Loan
Even on an asset-light acquisition, the right structure is usually more than one product, because the purchase price is never the whole cost of buying a business.
The acquisition term loan carries the business value, underwritten on the target's revenue and the buyer's record. Whatever physical equipment exists — operatories in a practice, lifts in a shop — finances separately as equipment, because it carries itself and takes that much off the acquisition loan. And the transition gets its own working capital layer: two payrolls before the combined revenue settles, vendor accounts re-papered in the buyer's name, a platform migration, the seller's hand-off period. In the software transaction, integration was a separate $900K term layer and the six-person sales team the thesis depended on was a $600K working-capital line, funded before the first new contract billed.
Buyers who fund the purchase and not the transition spend the first quarter short on cash at exactly the moment the acquired customers are deciding whether to stay.
See what the revenue actually supports
A quick review of your statements and the target's — before you sign a letter of intent.
Here's What Most People Get Wrong
Buyers start with the lender they have and work backward. A business banker who has handled the operating account for a decade is not a bad person to call — but the bank's acquisition product is built for a target with assets, and a buyer who spends ninety days learning that has usually lost the seller to someone whose money could move.
The second mistake is reading "no collateral" as "needs a personal guarantee on everything." That is what a bank offers when it cannot price the business. It is not what a revenue-based structure requires. A lender that underwrites $3M of contracted ARR, or a practice's collections, or four shops' combined deposits is holding the revenue as its security. The buyer's house is not part of the file.
The third is stopping at the purchase price. Sizing the loan to the LOI and hoping the transition funds itself is how a good acquisition turns into a bad first year. Larger transactions stack the same way — a $5M+ structure is the same three layers at a different scale — and the transition layer is the one nobody budgets and everybody needs.
For technology companies in particular, the buyer's data room is the whole application: ARR by customer, eight quarters of cohort retention, contract terms. Buyers who have that ready fund in days. Buyers still explaining what a renewal rate is to a bank are the ones a quarter behind.
Bobby's Take
The businesses worth buying are the ones with customers who already said yes. Software with a renewal base. A practice with a recall schedule. A shop chain with fleet accounts. None of that shows up on a bank's collateral form, and that is not a flaw in the business — it is a flaw in the form.
If the target has real revenue and you have a real track record in the trade, the loan exists. Get the revenue in front of a lender that reads it, fund the transition as its own line item, and get there before the seller's other buyer does. Most of the buyers I see lose a deal didn't lose it on price. They lost it on a bank's calendar.
FAQ
Can you get a loan to buy a business that has no collateral?
Yes. Revenue-based acquisition financing underwrites the business's revenue — contracted recurring revenue, a practice's collections, combined deposits across locations — plus the buyer's own operating record. The revenue is the collateral. A bank looks for real estate and equipment to appraise and, finding none, either declines or lends a fraction against a personal guarantee.
Do lenders look at the business you're buying or the one you already run?
Both. The target's revenue, retention, and deposits set what the business can service after close. The buyer's existing revenue, deposit history, and track record in the same trade set how the transaction is priced. An operator buying customers they already know how to serve is a different credit than a first-time buyer with a plan.
How fast can acquisition financing fund on a business with no assets?
Faster than an asset-heavy deal, because there is nothing to appraise. With the target's revenue by customer, the buyer's bank statements, and a signed letter of intent, a revenue-based structure can fund in days to a couple of weeks. The software acquisition above funded in 10 days; the dental and auto-repair acquisitions in 8.
