Can I use a line of credit from another business to purchase a second business?

In some situations, experienced business owners use available business credit, commercial lines of credit, retained earnings, or other business assets to help finance the acquisition of an additional business.

Whether this approach is appropriate depends on the financial strength of the existing business, available borrowing capacity, lender requirements, cash flow, and the owner’s overall financial strategy.

Using one successful business to help acquire another can be an effective growth strategy, but it also increases financial exposure. Buyers should carefully evaluate the potential risks and benefits before leveraging an existing business to acquire another.