How acquisition finance works
When you buy a business, lenders usually expect you to put in some of the price yourself and lend the rest, often secured on the business's assets. They look closely at whether the business's profits can cover the repayments.
Part of the price is sometimes paid to the seller over time instead (vendor finance), which reduces how much you need to borrow.
Worked example
Buying a business for £400,000 with a £100,000 contribution means borrowing £300,000. At 9% over 7 years, the monthly payment is £4,826.72, £405,444.77 in total.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Before you commit
Check the business's accounts and cash flow carefully (due diligence) and make sure the repayments are affordable from its profits after paying yourself.
Inputs for the business acquisition loan calculator
Purchase price
The price you're paying for the business.
Deposit
The amount you're contributing yourself.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over.
CALCULATOR QUESTIONS
Business acquisition loan calculator questions
How much deposit do I need to buy a business?
It depends on the lender and the business, but buyers usually need to contribute a meaningful share of the price themselves.
What do lenders look at?
Mainly whether the business's profits can comfortably cover the repayments, plus your experience and the assets available as security.
What is vendor finance?
When the seller agrees to receive part of the price later, so you borrow less from a lender.
Does this include fees?
No. Arrangement, legal and due diligence costs are extra.