Business Acquisition Loans

A business acquisition loan is a type of corporate finance used to buy an established business. Otherwise known as acquisition finance, it is a secure and reliable way to purchase a business when you cannot acquire the funds yourself.

What is a business acquisition loan (otherwise known as acquisition finance)?

Designed to help you purchase a business, acquisition finance can also be used to finance the other costs associated with buying a business. It is one of the more simple forms of business finance and involves an easy application process.

Key features

  • Usually time-limited so the loan must be used within a certain time frame
  • Often secured on assets within the business you are acquiring
  • Will usually be capped at 90% of the acquired business value
  • Different types of loans are available depending on your needs. These include mezzanine debt and asset-based lending.

Why do businesses make acquisitions?

A business acquisition is a corporate transaction where a business purchases either a portion or all of another organisation’s assets or shares. This is typically done to take control of the business’s current strengths and then build on these to better further it. In doing this, the purchaser may acquire a team of skilled staff, resources and the target business’s clients and reputation. These are valuable assets and can help increase awareness of the buyer’s brand.

How acquisition finance works and what it can be used for

The most popular option for most people looking to purchase a business is a business acquisition loan, and with good reason. If you are looking to purchase an established, viable business, it will come with a realistic value which means less of a risk to a lender.

Acquisition loans can be either secured or unsecured depending on individual circumstances.

Different ways businesses can finance an acquisition

  1. Secured term loan - This is a loan secured against an asset that you own, often your own home. Generally, the interest rates are lower than unsecured loans but secured loans are often a riskier option.

  2. Cash flow or working capital loan - If you need a quick cash injection into your business, cash flow loans may be for you. The amount you can borrow is based on your business’s ability to generate cash flows in the past and the future. The process is simple, funds will be received quickly and the repayment term is short.

  3. Mezzanine debt - This is a hybrid form of business lending and combines debt and equity. It is a more high-risk type of debt than traditional loans as not paying on time could result in giving up equity from your business, but it does offer higher returns.

  4. Asset-based lending - A flexible funding option for businesses to finance assets within the business you are acquiring.

  5. Private debt - This refers to loans that are usually made by non-bank investors. These commonly take the form of personal loans, credit card debt, or corporate bonds.

The advantages of a business acquisition loan

  • Individually tailored to suit your needs. There is no one size fits all approach so every application is assessed on an individual basis

  • High approval rates. Lenders are highly likely to accept you as they can sell assets if you default on the loan. Therefore it is less risky for them.

  • Stay in control of your business as no equity will be sold to the lender. You will also be able to borrow the money without compromising your own business’s cash flow.

The disadvantages of a business acquisition loan

  • Puts your assets at risk. This applies to any form of secured lending but is only an issue if you default on repayments.

  • Longer arrangement times. Unlike our instant loans, an acquisition loan takes longer to process as lenders need to assess the business you are purchasing along with various affordability checks.

Why choose Union Business Finance?

  • We are trusted by over 4,000 businesses and provide our clients with the best financial advice and solutions for them.

  • We have over 10 years of experience and a panel of over 100 lenders so we have the best team to direct you to some of the best business loans available.

  • We will give you a highly personalised, individual and bespoke service entirely catered to the specific needs of your business.

  • We understand that the best way to help you make important decisions about your business is to be transparent with you. We pride ourselves on building relationships with our clients. Getting to know you, means knowing the best financial solution for you.

How our business acquisition loans work

We know your time is precious so we make our application process as simple as possible for you.

  • Step 1: Apply: Tell us about your business. What are your goals? The better we know you and your business, the quicker we can find you a solution.

  • Step 2: Application review: Once you’ve completed the application, you can hand the rest over to us. We will get back to you as soon as possible but you can rest assured that your application is in the hands of experts.

  • Step 3: Receive your funds: Once we have approved your application, the funds will be released to you. The rest…that’s up to you!


Who is eligible for a business acquisition loan?

Most lenders require the following:

  • Two years of trading history from the purchasing business
  • Existing accounts for any businesses you own.
  • Good business credit score, personal credit score
  • No default on previous payment

Whilst these are preferable, nothing is set in stone. Please get in touch if you don’t meet all of the eligibility criteria and we may have a solution for you.

Is a business acquisition loan secured?

Acquisition finance can be either secured or unsecured and if you have any queries surrounding this, please don't hesitate to talk to us.

How much can I borrow?

We can fund business acquision loans up to £5m in value, and loans are normally capped 90% of the acquisition cost.

Is a business acquisition loan tax deductible?
We are not tax specialists. You’ll have to speak to a tax consultant/ accountant.
Do I need a deposit?
Depending on how strong the application is. Majority of our lenders don’t tend to ask for a deposit.
Are there different types of business acquisition?

Yes, business acquisitions depend on a number of factors, therefore there are different types based on those factors. Some may require a loan and we discuss in detail with any applicant on their requirements. 

Some types of business acquisition include:

  • Asset acquisitions
  • Share acquisitions
  • Comglomerate acquisitions
  • Leveraged buyouts
  • Management buy-outs
  • Horizontal acquisition
  • Vertical acquisition

Read more about different types of business acquisition on our blog. 

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Aintu Ltd T/A Union Business Finance is an independent Asset finance broker not a lender, as such we can introduce you to a wide range of finance providers depending on your requirements and circumstances. We are not independent financial advisors and so are unable to provide you with independent financial advice. Aintu Ltd T/A Union Business Finance will receive payment(s) or other benefit from the finance provider if you decide to enter into an agreement with them. Aintu Ltd T/A Union Business Finance is an appointed representative of AFS Compliance Ltd which is authorised and regulated by the Financial Conduct Authority under number 625035. Aintu Ltd T/A Union Business Finance aims to provide our customers with the highest standards of service. If our service fails to meet your requirements and you would like to report a complaint; please click on the link below;


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