Business loans for buying a business: a complete UK guide
Wednesday 10th September 2025
Last updated: 26th February 2026
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Cash flow challenge: Buyers finding a profitable business opportunity but lack the upfront capital required to complete the purchase.
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Perfect for: Entrepreneurs, management teams, franchise buyers and existing business owners looking to acquire an established UK business.
What is a business loan for buying a business?
A business loan for buying a business, often referred to as a business acquisition loan is funding specifically structured to finance the purchase of an existing company.
Unlike startup funding, acquisition loans are assessed partly on the performance of the business being purchased, which can make them more structured and predictable than early-stage lending.
Acquisition finance may be secured or unsecured depending on the size, structure and risk profile of the deal.
How much deposit do you need to buy a business?
Most lenders expect a buyer contribution. In the UK, deposit requirements typically range from 10% to 30% of the purchase price
The exact amount depends on:
- The strength of the target business
- Security available
- Your experience
- Your personal credit profile
- The size of the acquisition
For example:
Purchase price: £500,000
Buyer deposit: £100,000 (20%)
Loan required: £400,000
In some cases, deals may also include seller financing to reduce upfront capital requirements.
Types of loans used to buy a business
Secured business loans
Secured business loans is the most common structure for acquisitions. Security may include:
- Commercial property
- Residential property
- Business assets
- The acquired business itself
Secured lending typically offers:
- Lower interest rates
- Larger borrowing amounts
- Longer repayment terms
Unsecured business loans
Unsecured loans gives options for smaller acquisitions but usually require:
- Commercial property
- Residential property
- Business assets
- The acquired business itself
Asset-based lending
This is where the acquired business has significant assets (stock, machinery, receivables), asset-based lending can form part of the funding structure.
Development finance
If the purchase includes property or redevelopment plans, development finance may be relevant.
Government-backed schemes
- Start Up Loans (for early-stage businesses)
- British Business Bank-supported schemes
However, these are generally smaller facilities and not particularly suited for large acquisitions.
Example of how acquisition finance can be structured
Scenario:
Purchase price: £750,000
Buyer deposit: £150,000
Acquisition loan: £500,000
Seller financing: £100,000
Security: Commercial property
Repayment term: 5–10 years
By layering funding sources, buyers can reduce personal capital exposure while securing the business.
What lenders look for when funding an acquisition
Lenders typically assess both the buyer and the business being acquired.
Key factors include:
- Two years of trading accounts for the target business
- Management accounts
- Cash flow strength
- Profitability
- Industry outlook
- Buyer experience
- Personal credit profile
- A clear business plan
Strong financial records significantly improve approval prospects.
Can you get a business loan to buy a company with bad credit?
It may still be possible, however it may depends on a few things:
- Larger deposits may be required
- Security becomes more important
- Interest rates may be higher
- Lenders will scrutinise affordability closely
Where credit history is weaker, secured lending is often more realistic than unsecured borrowing.
How Novuna Business Cash Flow can help
If you are considering purchasing an established company, structuring the right funding solution is critical. Our team can help assess your acquisition, evaluate the funding structure and explore suitable business acquisition loan options aligned with your goals.
Get in touch with our experts today and we will find a great fit for your situation.