Actually, a SBA loan would be your best bet. There are probably not many alternative business loan options that you will get. Most alternative loans are based on the financial assets of a business - but, the business already has to be yours - thus, after you acquire the business, these alternative loans may help you grow.
Another bet would be to get the current owners to owner finance. You can offer 10% as a down payment and amortized the remaining balance over 20 years to set the monthly payment - then offer a 5 year balloon payment - meaning that at the end of five years, the remaining balance will be due. At this point, you could either go down to your bank with five years of experience under your belt and refinance that balance or just refinance it with the current owner - which ever you choose. Know that with five years under your belt - five years of success - you will have many, many options to refinance that balloon note.
Plus, coming up with 10% is much better and easier then coming up with the entire amount.
Business Money Today
Bad thing about SBA financing is the time to close and the collateral requirements, which is why I am looking at non-traditional. Also, traditional financing availability seems to be too few and quite far. Yes, the will not ask for an equity stake. But 70% of something is better the 100% of nothing, which is where traditional would seem to get me. Hence, the idea looking for non-traditional.
I'm currently investigating some angel investors at the moment. I'll let you know how that turns out.
I agree that the SBA or owner financing are probably going to be the only main options. $500K is beginning to be a considerable sum for most people to obtain for a start up. Very likely your liquid assets, and net worth will be looked at very closely, along with experience. If these are not there, an additional partner with net worth should be considered, who could be a minority owner, or silent, or both, and could also be bought out later. The owner financed route assumes the owners are willing to finance it. Most business owners who want to sell, want to sell, not finance the sale. An amount of 10% was stated, sure. However, keep things in mind from the perspective of the current owner. They don't have to negotiate a finance sale with you. If there is another buyer who pays the price they want or agree to in cash, who's offer do you think they will take, cash or 10% and a 20 year note? I think it will be very hard to get an investor for that amount, so these two options are the most realistic.
Well, familyadventure, I'd say you have received some very good advice . Let us know how well you succeed!