How to fund the purchase of an existing business

[Jeffers_S13]

Sorry if this sort of thread has been posted before, I did a few searches and was surprised to find nothing specific to my query.

Im a 28 yr old chartered engineer looking to change career entirely. I do not own a house and live in shared accomodation with some friends from Uni.

What are my chances of borrowing money to buy an existing buisness ? how much can be borrowed and what would someone need to 'put in' to buying a business to show willing or whatever to a potential lender ?

Regards

James

[Ian J]

There are no set rules but if you can convince a bank that the project is sound they may match your financial input into the venture.

There may be other alternatives including Small Firms Loan Guarantee or Princes Trust but much depends on the type and scope of business that you wish to buy.

[Jeffers_S13]

Thanks Ian,

So Id have to find half the asking price and then convince the bank to lend me the other half. It looks like Im a bit stuck as the business I had in mind is not by any stretch of the imagination a big sum but I barely have a 1/4 of its price. I wouldnt have thought its the sort of business that might gain financial help from the Princes Trust, having looked at examples of ones that have received help. Its more manual based with some special knowledge and skills needed and something I could turn my hand to through training from the present owner, due to me being a generally practical and hands-on chap.

Would it be sensible to approach the owner and look to purchase/by-in to the business another way ? and slowly gain ownership, as I have since located the company through google searching. Are there any other tried and tested methods that offer an alternative to buying a business outright ?

Thanks

James

[peterjhale]

small business loan guarantee scheme I believes goes up to 75% -- if it still exists


more info: http://www.teneric.co.uk/businessinfo/002.html

[inbakumar]

James,

Welcome to the forum.

Does the business you are planning to acquire has any tangible assets such as plant and machinery, stock, debtors etc? If so then it is possible to get a higher percentage loan from the banks.

The loan is dependant a great deal on the track record of the business and your managment experience. Some high street banks are now aggressively going after the MBO/MBI market and therefore by presenting a good business proposal you might be able to get the funding.

As for the Small Firms Loan, Peter mentioned above, it is not designed to aid a purchase of a business. Therefore you will find some push back on that from the lenders.

Regards,

[Cougar]

You could also consider vendor financing.

I have used it myself.