Considering Allica Bank to fund a business purchase?

What Allica Bank funds for buyers

Allica's Growth Finance is designed for established companies making a significant move. Allica lists business acquisitions and management buy-outs or buy-ins among its uses, alongside expansion, refinancing and improving cash flow.

Facilities are tailored to each business. They can be a term loan, drawn once and repaid on a fixed schedule, or a revolving credit facility that can be drawn and repaid as needed. Lending is secured, but Allica says facilities don't have to be fully asset-backed. Security can come from a mix of assets, including property, equipment, stock and money owed by customers.

For smaller amounts, Allica also offers lending under the government's Growth Guarantee Scheme, including business loans from £150,000 to £2 million, which can be used to fund an acquisition. Ask us whether that route suits your purchase.

What about Allica's smaller business loans?

Allica also offers unsecured business loans from £25,001 to £350,000, over 1 to 5 years, for limited companies and LLPs in England, Scotland or Wales with at least three years of filed accounts. Allica publishes rates of 9.90% to 13.75%, with a 3% arrangement fee and no early repayment charges. A personal guarantee from the directors who own the business is required.

The uses Allica lists for these loans cover growth, equipment, hiring, marketing and similar spending. Like most lenders, Allica will lend for any legitimate business purpose, which can include buying a business. If you're buying a business for less than £1 million, Allica's Growth Guarantee Scheme lending, from £150,000, is another route to ask about. We can compare it with other lenders that fund purchases of that size.

Who it suits, and who it may not

Allica tends to suit

• Buyers of established, profitable businesses in England, Scotland or Wales
• Smaller purchases of up to £350,000, where the borrowing company has three years of filed accounts
• Management teams buying the business they run (MBO) or one they'll run (MBI)
• Larger purchases of business-to-business companies, with security spread across several types of asset

It may not suit

• Buyers who want to avoid a personal guarantee, which Allica's business loans require
• Consumer-facing businesses needing more than £350,000, because Growth Finance is for business-to-business companies
• Businesses based in Northern Ireland
• Younger businesses: business loans need three years of filed accounts, Growth Finance usually two

What Allica looks at

Allica's enquiry checklist for Growth Finance asks for at least 24 months of trading and EBITDA (profit before interest, tax, depreciation and amortisation) of £500,000 or more. For business loans, Allica asks for three years of filed accounts, plus bank statements and recent accounts with the application. As with any acquisition lender, expect it to look at:

• The target business's trading record and cash flow
• How much the buyers are putting in, and any deferred payments to the seller
• The management team's experience
• The assets available as security

Each customer works with a dedicated relationship manager, who will want to understand the business and the plan after the purchase.

Pros and cons

Pros

• Two routes: business loans of up to £350,000, and Growth Finance of up to £15 million
• Published rates and no early repayment fee on business loans
• Choice of term loan or revolving facility for Growth Finance
• Growth Finance security can come from a mix of assets, not just property
• A dedicated relationship manager from the start

Cons

• Growth Finance starts at £1 million
• Business loans need a personal guarantee from the owning directors
• Growth Finance is limited to business-to-business companies
• Not available to businesses in Northern Ireland
• Growth Finance rates and fees aren't published; pricing is set deal by deal

Applying through iLendi vs going direct

You can enquire with Allica directly. Through iLendi, you tell us about your deal once and we compare Allica with other lenders that fund business purchases, including lenders that fund larger consumer-facing businesses, or buyers without three years of accounts. We present your deal the way lenders look for and stay with you through to completion. There's no fee to you; we're paid by the lender.