Loans to Buy a Business

To get a loan to buy a business, you will need to demonstrate to our SWIG Finance team that you have a solid business plan, relevant experience, and a robust cashflow forecast. As part of the assessment, the business you’re purchasing will also be assessed. Our Business Managers will ask for the financial accounts for the business and factor this into their overall assessment. You’ll also need to show that you have a realistic plan for how you’re going to repay the loan and this should be factored into your forecasts. At SWIG Finance, our team of experts will work with you to assess your needs and provide you with the right loan solution.

When purchasing a business, you will need to consider several financial factors. These include:

1. Cost of the business: How much will the business acquisition cost you in total? Ensure that you include any licenses or fees for solicitors.
2. The amount of working capital required to maintain and grow the business: You must consider the cost of maintaining the business for example rent or bills. You may also require capital for expanding the business, for example introducing new products or providing new services.
3. The level of profitability of the business: Can you make a profit from purchasing and growing the business? If so, how much and how long before you see a return on your investment?
4. Repayment terms of the loan: Can the business afford to make repayments according to the terms of the loan?
5. Interest rates: Interest rates can be subject to change; can the business adapt to these changes?

To evaluate a business you’re buying, it’s important to complete your due diligence on the financial performance of the business, this includes:

• Revenue or Gross Income: This is the total amount of money made by a business over a set period. Expenses and costs are deducted from this to calculate the net income.
• Profit Margins: This is the percentage that remains after you deduct the costs from the revenue of this business.
• Cash Flow: This is a measure of the outgoings and income of a business on a month-to-month basis. This is used to monitor forecasted cash levels, plan strategic business decisions, and ensure the business has sufficient cash to meet its obligations.
• Industry Trends: Look at the market values of the business and trends in the data from the market. Consider what the future of the industry’s market looks like.

It’s also important to consider the reputation of the business and its customer base, as well as its staffing levels, overheads, debts, existing systems and processes.

We would always encourage a prospective purchaser to take independent professional advice.

Purchasing an existing business has several advantages over starting a new business from scratch. An existing business will typically have an established customer base, a proven track record, and a brand that is already recognised in the market.

Additionally, purchasing an existing business can provide a faster route to profitability, because you can take advantage of the existing infrastructure, processes, and established networks. In many cases, you will already have staff with experience in the different departments of the business. But before purchasing the business, consider the efficiency of this infrastructure as this may commonly require further investment if systems and processes are dated. Also, make sure that the outgoing vendor isn’t about to set up in direct competition.

To evaluate a business you’re buying, you’ll need to do your due diligence. You should assess its financial performance, including revenue, profit margins and cash flow. You’ll also need to take into account the business’ current resources and assets, as well as its reputation and customer base. You should take professional independent advice before proceeding

Purchasing an existing business has several advantages, including an established customer base, a proven track record, a recognised brand, established processes and infrastructures, and potential growth opportunities.

SWIG Finance supports businesses and entrepreneurs based in the South West. The eligibility criteria differ depending on the situation of the business you are looking to acquire; we welcome initial enquiries to establish suitability.