AcquisitionFinance

The two limits

How much can I borrow to buy a business in the UK?

Updated

The loan is capped by the target's profit and by your deposit; the lower limit decides.

Talk to a specialist The price, your deposit and the target's EBITDA. The lending limits come from lenders' own pages.

Default: the £750,000 purchase in Novuna's worked example.

Novuna: deposit requirements typically range from 10% to 30% of the purchase price; its example puts down 20%.

Profit before interest, tax, depreciation and amortisation: what lenders measure debt service against.

Spark Finance: the standard leverage multiple for UK SME acquisitions is 2 to 4 times EBITDA for senior debt.

Default: the 7.5% fixed rate on the government's Start Up Loans. Bank Rate is 3.75%; your lender sets its own rate.

Start Up Loans run 1 to 5 years; the Growth Guarantee Scheme allows terms up to ten years.

What you could borrow

£450,000

The lower of what the price still needs after your deposit and what the target's EBITDA supports at your multiple.

Your deposit£150,000
Borrowing the deposit leaves to find£600,000
What the profit supports at your multiple£450,000
Still to find (more deposit, vendor finance or a second lender)£150,000
Monthly repayment£9,017
Repayments a year£108,205
Times the EBITDA covers the year's repayments1.39
Stamp Duty on a share purchase (0.5%)£3,750

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Share purchase or asset purchase?

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  • Free, and no obligation
  • Read and answered by Joe himself, never passed to a firm or a list
  • Information only: no tax, legal or investment advice
How this calculator works
  • The leverage cap. Spark Finance: the standard leverage multiple for UK SME acquisitions is 2 to 4 times EBITDA for senior debt, with some specialist lenders stretching to 5 times. The calculator lends the smaller of that cap and what the price needs after your deposit. (Spark Finance: business acquisition finance in the UK)
  • The deposit. Novuna: in the UK, deposit requirements typically range from 10% to 30% of the purchase price. Capitalise puts lenders' share at between 70% and a maximum of 90% of the price for a well established, profitable target. (Novuna: business loans for buying a business, a complete UK guide)
  • The repayment. A capital-and-interest loan repaid monthly over the term at the rate you enter: no arrangement fees, no interest-only period, no balloon. The default rate is the 7.5% the government's Start Up Loans charge, a reference point and not an offer. (Start Up Loans terms, as listed on this site's government-backed finance dataset)
  • Stamp Duty and SDLT. A purchase of shares pays 0.5% duty. An asset purchase pays none on shares, but any freehold or lease in it pays SDLT at the non-residential rates (nothing up to £150,000, 2% on the next £100,000, 5% above £250,000), which the calculator does not add. (GOV.UK: SDLT non-residential and mixed rates)
  • Not an offer. Lenders also weigh the target's customers, the buyer's experience and the security available. The figure frames the conversation with a lender; it is not a decision.

The profit limit

Spark Finance: the standard leverage multiple for UK SME acquisitions is 2 to 4 times EBITDA for senior debt.

Source: Spark Finance: business acquisition finance in the UK

The deposit limit

Novuna: deposits typically range from 10% to 30% of the purchase price. Capitalise: lenders will typically fund between 70% and a maximum of 90% of the price for a well established, profitable target.

Source: Novuna: business loans for buying a business, a complete UK guide

Run your figures

The acquisition finance calculator applies both limits and works out the repayment.

Tell us what you want to buy

Share purchase or asset purchase?

Tick the box above to send your enquiry.

  • Free, and no obligation
  • Read and answered by Joe himself, never passed to a firm or a list
  • Information only: no tax, legal or investment advice

Sources

This site's own datasets, every figure quoted from its source and dated:

  1. Spark Finance: business acquisition finance in the UK
  2. Novuna: business loans for buying a business, a complete UK guide
  3. Capitalise: acquisition finance
  4. British Business Bank: Growth Guarantee Scheme
  5. Bank of England: Bank Rate
  6. GOV.UK: tax when you buy shares
  7. GOV.UK: SDLT non-residential and mixed rates

Work out what you can borrow

The price, your deposit and the target's EBITDA. The lending limits come from lenders' own pages.

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