Business acquisition finance: loans to buy a UK business

What is business acquisition finance?

Buying an established business is different from financing a start-up. There is a trading history to examine, a price to agree and an operating business to hand over. Finance bridges the gap between the money you contribute and the funds needed to complete the purchase, while leaving enough cash to keep trading afterwards.

The purchase may include goodwill, fixtures, machinery, stock and premises. A share purchase and an asset purchase also create different legal and funding considerations. Your solicitor and accountant help establish what you are buying and the risks you are taking on; we work on the finance structure alongside them.

There is rarely one suitable loan for every deal. An acquisition may combine a term loan, property-backed borrowing, asset finance and an agreed payment to the seller later. The important question is not simply whether you can raise the asking price, but whether the combined repayments leave the business enough room to operate.

Types of business acquisition finance

The right structure follows the business and the transaction, rather than a product label. Each facility has its own costs, security and repayment terms. We explain the options and present the application to lenders whose criteria fit the purchase.

Term loans

A term loan provides borrowing repaid over an agreed period. It can support the purchase of a trading business where its cash flow can service the debt. Secured and unsecured options have different criteria; unsecured does not necessarily mean that no personal guarantee is involved. Read about term lending and trading-business acquisitions.

Commercial mortgages

When the purchase includes a freehold, a commercial mortgage may fund the premises. The property valuation, business performance and proposed use affect the offer. A longer repayment period can reduce monthly payments but may increase the total interest paid. Our freehold buying guide explains the ownership and funding considerations.

Government-backed loans

The Growth Guarantee Scheme may support an eligible transaction through an accredited lender. Facilities are generally available up to £2 million at business-group level, with different limits and rules for some borrowers. It is not a grant or an automatic approval: the lender assesses eligibility, viability and suitability for the proposed acquisition.

The government guarantee protects the lender, not the buyer from repayment. You remain responsible for the debt, and any security or personal guarantees should be understood before proceeding. Scheme terms can change; the lender confirms the terms that apply to your application. Read our government-backed loans explainer and the British Business Bank’s scheme information.

Asset finance

Equipment and vehicles may support a separate facility, depending on their value, condition and ownership. Asset finance is not a substitute for funding goodwill, and existing finance or hire agreements need checking. See the asset-finance considerations for trade businesses.

Seller finance

A seller may agree to receive part of the price after completion. This can bridge a funding gap, but it creates another obligation that must fit the cash flow and the main lender’s conditions. Your solicitor documents the payment dates, security and consequences of missed payments. Our leasehold buying guide discusses deferred consideration.

Buyouts

A management buyout or management buy-in describes who is acquiring the business, rather than a single finance product. Existing managers and incoming buyers may use different combinations of equity and borrowing. The ownership structure and operating plan need to be clear. Explore business buyouts and funding options.

How much can you borrow, and what deposit do you need?

We arrange funding from £100K to £100M across different facilities and transaction sizes. The amount available for your purchase depends on lender assessment, not just the asking price. A valuation below the agreed price can create a shortfall even when the buyer’s deposit was sufficient at the outset.

Our buying guides discuss acquisition deposits ranging from 5% to 30%; individual deals can fall outside that range. The business’s trade, assets, sector and your own circumstances influence the contribution a lender will ask for. Borrowed deposit funds also bring repayments that must be included in the affordability assessment.

Separate your purchase deposit from legal and accountancy fees, valuation costs, any rent deposit, stock payments and working capital. Putting every available pound into the price can leave a sound business short of cash immediately after handover. Read how much deposit you need and try the deposit and repayment calculator for an illustration, not a lending offer.

What lenders assess: the iLendi Six

Before approaching a lender, we work through the iLendi Six: the target business, your business plan, your experience, your deposit, your credit profile, and security and guarantees. Together they explain what is being bought, how it will be run and how the borrowing will be repaid.

Gather accounts and recent management figures, bank statements, the sale particulars, details of premises and any lease, evidence of your contribution and a realistic cash-flow forecast. Explain owner adjustments and one-off costs rather than assuming a lender will accept the seller’s headline profit.

We help strengthen and present the case; the lender makes the credit decision. A decision in principle is not the same as a final offer or funds ready to draw. Read what lenders look for at decision in principle.

Freehold vs leasehold purchases

With a freehold purchase, the premises are part of the transaction. Property security may support a different facility and term from borrowing used for goodwill. Building condition, title, valuation and any mixed residential use need attention alongside the business accounts.

With a leasehold purchase, you buy the business operating from rented premises rather than the building. Lease length, assignment consent, rent reviews, permitted use and repair obligations matter to both you and the lender. A loan must be considered alongside the lease rather than assuming the two will fit automatically.

Neither tenure removes the need for a completion budget. Compare the costs of buying a freehold business and the costs of buying a leasehold business, with professional advice on the specific transaction.

Worked example: price to monthly repayment

Consider an illustrative £600,000 purchase with a 20% deposit. The buyer contributes £120,000 and finances £480,000. Assuming a constant 5% annual interest rate and capital-and-interest repayments over 20 years, the estimated monthly payment is £3,168, rounded to the nearest pound.

Purchase price

£600,000

Buyer’s deposit

£120,000

Amount financed

£480,000

Assumed annual rate

5%

Assumed term

20 years

Est. monthly repayment

£3,168

This is not a quote or a confirmed deal. It excludes lender and broker fees, legal and valuation costs, taxes, stock and working capital; it assumes no rate changes or additional borrowing. A 20-year term is not available for every acquisition loan. Actual payments depend on the offer and repayment schedule.

The illustration tests the borrowing payment only. Your forecast must also cover rent where relevant, wages, suppliers, tax and an operating reserve. Consider how the business would cope with weaker sales or higher costs before committing to the price.

Acquisition finance and loans case studies

Different sticking points call for different funding structures. These existing deal notes show how experience, deposits, seller payments and trading income can affect an application. Previous outcomes do not guarantee the same result for another buyer.

Businesses we fund

We work with buyers of trading businesses across the UK. Each sector brings different considerations: recurring income, regulation, lease quality, staffing and equipment can all affect the lender’s view. Start with the relevant sector page for funding considerations particular to your purchase.

• Pharmacies
• Dental Practices
• Restaurants
• Cafés & Coffee Shops
• Garages & MOT Centres
• Care Homes
• Day Nurseries
• Hotels
• Accountancy & Bookkeeping
• Dry Cleaners & Launderettes

View all businesses we fund →

Process and timeline

Start with a conversation about the business, asking price, your experience and contribution. We review the available information and identify a suitable funding route before preparing the lender application. Being open about a shortfall or a credit issue early gives us a better chance to address it properly.

The lender then assesses the case and may issue indicative terms subject to further checks. Valuations, due diligence and legal work follow; any landlord, franchise or regulatory approvals run alongside them. We coordinate the finance process with the relevant parties, but some steps are outside our control.

Completion takes place when the funding conditions and legal arrangements are satisfied. Avoid treating an indication of interest as a guarantee that money will be ready on a particular day. Read the offer-to-completion timeline and allow for the complexity of your own purchase.

Business acquisition finance FAQs

For more answers, visit our buying-a-business FAQs.