It is a question that many of our clients ask, but unfortunately not one which has a straight forward answer: “What deposit do you need to buy a business?”
Unlike a residential mortgage, where lenders clearly state the loan-to-value required, when it comes to raising commercial finance to purchase a business there are many different factors which lenders consider.
For example, lenders will look at whether the business is freehold or leasehold, which will influence what they are willing to provide in terms of finance. They also take into consideration the actual sector of the business itself, whether you are looking at purchasing a pub, or a post-office, or buying a campsite, will influence the proportion of any purchase price which lenders will require as a deposit.
The financial performance of the business may also influence how much lenders are willing to provide in terms of finance. And if there is additional income, or additional security available, then it might even be possible to raise the full amount of finance, depending on the overall circumstances.
So we have to apologise to anyone who was looking for a simple percentage figure in answering the question – it is not that clear cut. But if you are keen to explore your finance options when it comes to purchasing a business, then you can discuss them with your local ASC director today.