Buying a Profitable Business?

You have identified a profitable business that you want to purchase. The business comes with either a freehold or long leasehold property that isn't valued highly enough for your bank to fund the acquisition in tandem with any cash you may have as a deposit! This is a common situation, however we now have a facility that may help prospective business purchasers.

The Business Purchase Finance Facility

The first thing to state is that the loan option on offer is in effect a bridging loan, with typical short term finance charges and interest rates. Essentially the bridging loan facility is offered to a maximum of 70% of the "going concern" or "reasonable operator value" of the business, not the "bricks and mortar" property value.

Note that the business itself, should be profitable enough to cover interest charges to maximise the loan available.

There are no set criteria for this kind of loan and each applicant and business is judged solely on individual merit. The due diligence process also takes into account how likely longer term finance can be put in place once the business has been acquired and the applicant has established a track record with their bank. If all the answers to the above are positive, then funding may be granted. It may also be that in the right circumstances little or no deposit is required for the business purchase, although this cannot be guaranteed.

Is My Target Business Suitable for This Facility?

Specific exclusions for this kind of funding are short leasehold businesses, i.e. where the property itself has a lease where the unexpired term makes mortgaging impossible.

The kind of businesses that we may be able offer this loan option are as follows:-

• Care Homes.
• Hotels, but probably not guest houses trading below the VAT limit.
• Public Houses.
• Leisure and Sports facilities.
• If fact, any business with a mortgageable commercial property.

If you are thinking of purchasing a business with only a short lease where an annual rental is required then visit our Mortgage Loans to Purchase a Short Leasehold Business page.