After you have decided on the type of business you have decided to buy, now is the time to consider the various sources of finance available to you. As a general rule we recommend that buyers look to identify and research the financing available to you before you start viewing potential businesses.

Bank Loan To Buy a Business

Generally banks are more open to lending money to people looking to acquire an existing business that possesses a successful trading history. With the current growth of the UK economy and the stream of government initiatives to boost small business lending, banks are starting to demonstrate increasing confidence in small business.

At Intelligent Business Transfer, around half of our buyers borrow money from their bank to help fund the purchase of a business. Typically banks will contribute 50% to 70% of the total selling price, with the remaining balance expected to be completed in cash by the buyer. In certain circumstances close to 100% commercial or business mortgages may be available for buyers purchasing freehold and leasehold businesses. Additional security would be required for a 100% mortgage.

In order to successfully secure a loan from a bank to finance the purchase of a business you will need to prepare a comprehensive business plan detailing information about the company you are looking to purchase as well as information about your experience, skills and financial history .

Additionally we also oversee deferred payments deals whereby buyers pay a lump on completion followed by monthly instalments thereafter. This is a very innovative way of funding where the business accounts are weaker.

Intelligent Business Finance Services

Our team of national finance partners will assist you in your search for finance to a buy a business whether you are an experienced operator or a first time business buyer. As an independent FSA regulated business finance lender we have access to a wide range of business lenders. We can provide you with full management of the process from application to completion. Our management of the process will save you precious time and money.

Although there is a good chance we can secure finance whatever your financial circumstances, you can assist your application by preparing the following:

  • Additional security such as equity in your home
  • Significant deposit of +20%
  • Comprehensive business plan
  • Demonstrate relevant business experience

We recommend following the below points in order to improve your chances of securing a bank loan for a business purchase:

  • Do your homework: Ensure that you are fully versed in the company’s accounts. You will need to have access to the company’s audited accounts for three years.
  • Prepare a business plan: Although you don’t need to provide an exhaustive plan at this stage, you should cover the crucial details of why you are buying the business, how you will operate the business and how you plan to grow the business.
  • Prepare your cash deposit: To really improve your chances of securing a bank loan you should be planning to put down a payment of 15 to 30 percent of the agreed selling price. This demonstrates your commitment to the opportunity and is more likely to inspire confidence in the banks.