Loans to Buy a Business

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Find a bespoke loan to buy a business to invest and grow

With so much competition out there in the marketplace, it has been found that merely 50% of the UK businesses have been able to exist till 3-4 years. For them, it is indeed a challenge. For others, it is a golden opportunity to invest and grow their business. Yes, they tend to purchase an existing business and increase their commercial sphere in the UK.

Such a process involves lesser risks particularly when the business has been active for the last few years. Still, it is a costly process and not all companies can bear the expense of that significant purchase. At some point in time, you will have to look for alternative funding, like a loan to buy a business.

If you have already made up your mind to expand your business sphere, you can buy another company, and it has many advantages in your favour. However, you cannot ignore the possible risks. In reality, it is totally a different intention. You are not only buying a business, but also its assets, cash flow, returns, brand value and customers. You have to spend money to sustain or to grow it.


In such a scenario, getting the right finance to buy existing business in the UK becomes mandatory. Thebusinessfunds, your own business loan broker to buy a business, plays a crucial role in availing of the suitable finance to back your purpose. Once you submit your loan query here, you will get the opportunity to compare 50+ lenders offering financing for buying a new business.

How does the process of business acquisition loans work?
Loan amount £10,000 to £500,000
Loan term 36 months - 120 months
Loan types Secured and unsecured
Interest rates Fixed and variable
Loan comparison rates Starts from 5.69%

What are the advantages of a loan to buy a business?

Are you going to apply for loans to buy a business? Be ready to get many advantages. You have a higher chance of buying a company as well as getting a business loan to make the purchase possible. First, you need to search out a business where you can show your interest and then approach us to find and compare plenty of loan deals from top lenders.

With an established business, you get the advantage of a well-settled business structure, marketing and prospects of getting better returns. Some financial experts prefer it over starting your own business from level zero, as it can be costly. Let us explain some of the other benefits of unsecured or secured business loans to buy a business.

  • Chance of getting instant returns

    You have been running your company for a significant duration. Therefore, you are very well aware of the importance of cash flow. If you purchase an existing company, it means the base of cash flow is already there, and you only need to capitalise on it. If you are successful in it, you may get more prominent returns in the near future.

  • Well-settled business activities

    When you start your own business, it becomes tough for you to process the business workflows, as there are many challenges. In contrast, buying an already existing business will have a settled workflow. You can save money and time because you have to review it and process it to raise its growth capital.

  • Customer base is already there

    Your company and its products cannot be successful if you lack the customer base. Buying a company with a pre-existing customer base can work in your favour. You do not need to make extra efforts in this direction, and if you are able to communicate with them, then everything will be in your hands.

  • A wide network is already there

    Marketing of a business is extremely crucial to widen the network of your business. Purchasing an established brand will already have a wide network in the UK. You can communicate with suppliers, the legal team, accounting staff, and transport experts without anything to do particularly.

  • A proven financial record

    An established business has already proved its financial record by achieving a business model and sufficient cash flow. It is certainly an alluring factor for investors. They already have higher trustworthiness to get the attention of loan providers. There will be no difficulty in availing of a loan to expand the business.

Despite these benefits, it is vital to research well and assess the value of that business before applying for a business acquisition loan.

How to prepare before getting a business loan to buy a business?

Research is very important before jumping into the world of loans. You should do proper research before picking the best loan to buy a business in the UK. It should involve research on the market and the industry that you are targeting.

The crux of the suggestion is you must be sure about your purchase and identify everything about it. You should know the market before walking ahead to your financial purpose. For instance, if your business belongs to the healthcare industry, then your priority should be to acquire a company in that industry only.

  • A precise business plan

    Your priority should be your business plan. It is something that should be treated seriously and urgently. It is important because most UK business loan lenders will make your business plan mandatory. They sometimes make it the sole criterion to approve the loan application. It should have a proper explanation of the total cost and revenue prospects of the new business which you are going to acquire.

  • Debt-to-income ratio

    You are about to go for a business loan to buy an existing business, but have you checked its debt-to-income ratio? If not, then you are making a mistake. You need to consider this while planning for the business purchase. A good ratio (which should be below 40%) indicates that you will be able to manage all types of debts and handle the loan monthly instalments with ease. You can do this even if the cash flow is not at your expectation.

  • Adequate amount to manage down payments

    There are not many deals available where you will be able to get the full amount from a business loan for buying a business. Many lenders require a down payment. Therefore, you need to have a sufficient amount to manage the down payment and show the lender that you are serious about business buying. It also helps in avoiding the possible risks of applying for a hefty amount.

  • Business credit score

    Buying a business will include many activities such company’s assets and liabilities. While looking for a business loan to buy a business in the UK, you should consider these aspects as they are determine the credit score of that company. Lenders always prefer a good credit score. However, Thebusinessfunds is in communication with some private lenders offering loans for companies that have lower credit profiles. The interest rates may be on the higher side.

  • Closing prices to finalise a deal

    You are going to sign an agreement with the company that you are acquiring. It does involve closing costs that will be transferred from the previous company’s owner to the new one. You should be familiar with all the terms and conditions of that agreement before signing the contract. You must be aware of the closing costs for which you may need a commercial loan to buy a business.

What are the types of business loans to buy a business?

In the UK, a traditional business loan to buy a business has been a preferred choice for most of the businesses. Nowadays, a range of loan options is there to secure a loan for that commercial purpose. These include:

Unsecured Loans

Many lenders provide these loans across the UK. Despite the higher interest rates, businesses want unsecured business loans because it is relatively easy to get loan approval.

  • Amount you can borrow between £5,000 and £300,000
  • Loan term can be available up to 10 years
  • No need for collateral, making instant decisions possible

Secured Loans

Secured business loans to buy a business must have the back-up of a business asset, making it a bit complicated. Otherwise, you get the benefit of lower interest rate.

  • Loan amount starts from £10,000 to £700,000
  • You can choose the loan term up to 20-30 years
  • Higher chances of loan approval as lender is at no risk

Invoice Financing

This sort of business finance can be helpful while purchasing a new business. Under this option, you can share outstanding invoices as loan collateral with the lender.

  • The loan provider may release immediate cash to your bank account
  • This will be helpful if there are pending bills of the company that you will buy
  • You can borrow the loan amount up to £100,000

Long-term Loans

When it comes to common business loan options, long-term business loans will always be on the list. These will be accessible for larger amounts and for a longer duration.

  • Borrowing amount limit may go up to £500,000
  • You can repay the amount up to 15 years
  • Loans can be secured with either a business asset or a personal guarantee

These may be the options but some other loans are also available in the UK marketplace. Thebusinessfunds is perhaps the best place to find and compare the best loans to buy a business in the UK. Our loan experts will help you to pick the most suited one.

How to qualify for a loan to buy a business in the UK?

Banks, credit unions, private online lenders and other financial institutions are offering long-term and short-term finance to buy existing business in the UK. The qualifying criteria will be based on which lender you have chosen and its terms and conditions.

Whatever your lender’s choice, every one of them will evaluate your qualifications on the basis of your own business and the one you are going to purchase. Overall, your lender may ask you these questions:

Details about you and your current company
  • You must be a UK citizen and living permanently
  • You must have experience to run the business and must be able to purchase successfully
  • Your credit history should not have any issues while applying for a business loan to buy a business
  • Your capability to borrow based on your personal income and business assets
  • Total amount you are investing in buying an existing business
Details of the business that you are buying
  • What is the structure of the business?
  • What is the location of the company?
  • How long that your business has been in the market?
  • How much is the turnover of the business and profitable returns?
  • What is latest cash flow?
  • What assets does that business possess if applying for secured business loans to buy a business?
  • How many debts are pending?
A detailed plan to get a commercial loan to buy a business?
  • A well-explained information amount the industry and relevant competitors
  • The actual status of the existing business in the industry
  • Possible challenges and your strategies to face them
  • A clear detail of actual business turnover, cash flow and your capacity to grow it further
  • Your financial goals for shorter and longer duration
  • Your plan to operate the purchasing business to sustain its reputation in the market

How to get a loan to buy a business?

Getting a loan to buy a business should be a well-planned process. We do provide you with both offline and online lending options, but we still prefer to go for online loans if you need funds quickly. Our loan experts will guide you throughout the process so that you can manage the loan well and accomplish your desire to buy a business successfully.

  • Analyse your real needs: Your first task is to evaluate the current financial situation of your business and analyse your capacity to purchase another one. Check all the assets you have, try to clear all debts prior to applying and stay within your affordability.

  • Research various loan options: The next step is to do research on the loan market. You can do it your own but since you have little knowledge of loan options, it will be better to approach business loan broker to buy a business. You get proper guidance while finding and comparing various options.

  • Do necessary paperwork: Your lender may ask you to submit important documents alongside your loan application. However, it depends from lender to lender. Still, you may be asked to submit papers related to tax returns, bank statements, balance sheets, and monthly income proofs. Some lenders may also ask for a hard or soft copy of your business plan.

  • Discussion with the lender: Before submitting your application for a business acquisition loan to buy a business, you should discuss it with your lender. You can do this with our presence, but it is important to have good communication with your lender. You can discuss various things like documentation and personal details and can negotiate the interest rates.

  • Loan approval and fund disbursal: Once everything becomes clear between you and your lender, you can submit your loan application. Lenders may take 2-3 business days to analyse your application, documents and asset value to give you a loan decision. Soon, you will receive the desired loan amount to your business bank account.

With this process, you will get the benefit of a business loan to buy a business and grow your reputation in the UK market.

How can Thebusinessfunds help?

Seeking a business loan to buy an existing business is just a start. There are many things to do to make sure the acquisition of another business operates hassle-free. Besides, you need to make timely loan repayments till the loan term ends.

Therefore, our efforts are to guide you in keeping your business finances intact and ensure everything goes according to your plan. With Thebusinessfunds, you can experience comfort in tracking various loan deals that are available on loans to buy a business and a well-organised online set-up to ensure timely assistance and comparison.

We are fully dedicated to helping various businesses in their endeavours of purchasing an existing business. With our wide network of lenders, you have a large scope of comparing various deals to pick the most matched one. Let us start our discussion now.

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Do loans to buy a business guarantee good interest rates?

Yes, there is always a possibility of getting a decent interest rate on a business loan to buy a business. However, it will depend upon the business owner’s personal financial history and overall track record of the business. If you have been carrying an excellent credit score and purchasing a business which is at its peak, lenders do not hesitate to offer you good interest rates.

What business loan lenders assess applications to buy a business?

If you require getting a loan to buy a business in the UK, the loan providers consider various things. These include:

  • Your experience in the market matters a lot. Lenders prefer a profitable business, and if you show the same, they are ready to consider your application.
  • The second thing that lender prefers is your business plan. It should have an explanation of your business aim, annual profit, regular or irregular costs, and your affordability to repay the loan.
  • Loan providers also consider what assets your business has. If you have considerable assets, you can opt for asset financing to use as loan collateral.
  • Last but not least, lenders also want to know which business you want to purchase belongs to which industry. It should be a profitable industry and can guarantee sufficient returns.
Is buying an established business better than starting a fresh one?

Both have their advantages. Still, buying an existing business has the upper hand than starting a new one. You do not need to make efforts to establish. Instead, everything is there and also the regular income ways. These benefits go further when the present staff of that business want to remain under your ownership, too. Overall, if you want to save time and money, then buying an existing business is always a good idea.

How much amount of deposit is required to buy a business?

There is no specific rule and norms on the deposit. It depends upon individual lender’s norms and your convenience as well. If you have savings to be used for deposit, then try to pay a maximum deposit as it will further lower the amount of loan to buy a business in the UK. Moreover, if the loan amount is lower, you can repay it conveniently without disturbing the regular budget of your business.

What are the disadvantages of buying a business with a loan?

Once you are going to buy a new or established business, you should know some of its disadvantages, too. Our loan experts have compiled some of them for you:

  • Purchasing another business will cost you more
  • You will have to manage the problem that occurs due to leaving or retaining the staff
  • You may need to purchase fresh equipment as they may have been outdated
  • You have to keep up the faith of the customers
  • You may have to combat your negative reputation as you have acquired someone else’s business

You can continue with your loan comparison if you are ready to face such risks and want a business loan for buying a business.