Loans for business acquisition in the UK

You can borrow most of the price of an existing business, but not all of it: expect to put in 10 to 30% yourself, the range Novuna Business Finance gives for UK deals. The harder test is whether the business's profit can repay the loan and still pay you, and on a small deal financed 80% with debt, it often barely can.

Figures from lenders' own pages and gov.uk, checked 1 November 2026.

How lenders decide what to lend you

There are two ways a lender can get comfortable with an acquisition, and most small deals use a mix of both.

Cash-flow lending sizes the loan against the target's profits. Barclays structured finance funds acquisitions and management buyouts: up to £5 million over up to five years, for profitable businesses with EBITDA over £500,000. That threshold rules out most cafés, shops and salons.
Asset-backed lending secures the loan on property, equipment or your own assets. It is the realistic route for most small acquisitions, which rarely meet a cash-flow threshold like that one, and it is why a business with its own freehold is easier to finance than one in rented premises. Our secured business loans guide covers what lenders accept as security.

Not published: none of the lender pages we read gives a rate for acquisition lending; it is priced deal by deal. Anyone quoting you a rate before seeing the target's accounts is guessing.

How much deposit do you need to buy a business?

Novuna Business Finance says UK deposit requirements typically range from 10% to 30% of the purchase price. Novuna's own illustration is a £500,000 purchase with a £100,000 deposit, 20% of the price, and a £400,000 loan. The deposit can come from savings, a remortgage of your home (which puts the home at risk), an investor, or vendor finance where the seller waits for part of the price.

Worked example: buying a £250,000 business

Say you agree to buy an established café or shop for £250,000 that makes £70,000 a year before interest and before paying you. You put in 20% (£50,000) and borrow £200,000 over 5 years. Lenders do not publish rates for this kind of loan, so the table shows the arithmetic at three illustrative rates; these are not quotes.

Rate (APR)	Monthly repayment	Repayments a year	Profit ÷ repayments	Left for your pay and tax
8%	£4,029	£48,343	1.45×	£21,657
10%	£4,207	£50,485	1.39×	£19,515
12%	£4,387	£52,646	1.33×	£17,354

At 10%, £70,000 of profit minus £50,485 of repayments leaves £19,515 a year to pay yourself, before income tax, for five years. One bad season and the loan comes first. Raise the deposit to 30% (£75,000) and the repayments drop to £44,175 a year, leaving £25,825.

Our view: if the business cannot repay the loan and pay you a living wage with room to spare, do not buy it on these terms. Negotiate the price down, ask the seller to defer part of it, or put more in. Lenders set their own minimum cover ratios, and none of the lender pages we read publishes one, so a lender's yes is not proof the deal works for you.

Buying shares or buying assets

	Share purchase	Asset purchase
What you buy	The company, with its history and liabilities	Chosen assets: equipment, stock, goodwill, sometimes property
Tax on the deal	0.5% stamp duty: £250,000 × 0.5% = £1,250	Outside the scope of VAT if it qualifies as a transfer of a going concern
Staff	The employer does not change	Employees usually transfer to you on their existing terms (TUPE)

The structure changes what a lender can take as security, so settle it with your solicitor and accountant before you apply. The British Business Bank publishes a due diligence checklist for buyers to work through before you make an offer.

Government-backed loans for a business purchase

The Growth Guarantee Scheme gives accredited lenders a 70% government guarantee on facilities up to £2 million per business group, for businesses with turnover up to £45 million. You stay 100% liable for the debt, and under the scheme your main home cannot be taken as security. The Growth Guarantee Scheme supports term loans, overdrafts, asset finance, invoice finance and asset-based lending; gov.uk does not list buying a business as an included or excluded purpose, so it is the accredited lender’s call.

Start Up Loans are personal loans of £500 to £25,000 at a fixed 7.5% over 1 to 5 years. They will not fund a purchase on their own, and the published eligibility does not mention buying an existing business. See our Start Up Loans guide.

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Frequently asked questions

Can I get a loan to buy an existing business?

Yes, but rarely for the whole price. Lenders lend against the target's profits, its assets or your own security, and expect you to put cash in: Novuna Business Finance puts typical UK deposits at 10 to 30% of the purchase price. For larger deals, Barclays' structured finance funds acquisitions up to £5 million over up to 5 years, but only for businesses with EBITDA over £500,000.

How much deposit do I need to buy a business?

Plan on 10 to 30% of the price, the range Novuna Business Finance gives. On a £250,000 business that is £25,000 to £75,000. Where you land in that range depends on the lender's view of the target's profits and the security on offer.

Can I use a Start Up Loan to buy a business?

Possibly for a small part of it, but check first. A Start Up Loan is a personal loan of £500 to £25,000 at a fixed 7.5% for people starting a business or trading for up to 60 months. The published rules do not say whether buying an existing business qualifies, so ask Start Up Loans before you build it into your deposit.

Is it cheaper to buy the shares or the assets?

They are taxed differently. Buying shares usually carries 0.5% stamp duty (£1,250 on a £250,000 price) and you inherit the company's history and liabilities. Buying the assets as a going concern can be outside the scope of VAT if HMRC's conditions are met, and employees normally transfer to you on their existing terms under TUPE. Your solicitor and accountant should decide the structure before you approach a lender.

Can I buy a business with no money down?

Not with a loan alone: none of the lender pages we read offers 100% acquisition finance. The usual way to reduce the cash you need is vendor finance, where the seller agrees to take part of the price later, sometimes linked to how the business performs after the sale. That money is still owed, so it belongs in your affordability sums.

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Sources

Every figure on this page comes from the provider's own website or terms, or a named primary source, read on 1 November 2026. Where a provider does not publish a term we say "Not published" rather than fill the gap from a comparison site.