Are you thinking of taking the leap and buying a business?

Buying an established business can be an attractive option for many, as you’ll be purchasing a known quantity with historical records of profitability to help with forecasting and putting a business plan together. What’s more, you’ll start with an existing customer base as well as having assets and staffing already in place.

You’ll also likely see cash flow from day one and save on many of the outlays from starting a new business from scratch. You may even already have an in-depth knowledge of the day-to-day running of the company if you are part of the existing management team (and are considering a buyout). It can also be easier to get finance for buying an existing business, as you’ll be able to show financial records that attest to the viability of your venture.

For those who have decided to buy, we answer some commonly asked questions about the finance options available for acquiring a new business as well as for management buyouts.

What’s the difference between an acquisition and a management buyout? 

An acquisition is when you buy a business by purchasing most, or all, of its shares to gain a controlling interest. A management buyout (MBO) is also a form of acquisition, except that it’s when the business is bought by the company’s existing management team.

A management buyout can be an attractive option for several reasons. Not only does it save going to market and disclosing potentially sensitive information, but the managers will intimately understand the company’s workings. This means that the seller can leave with the comfort of knowing that things will be left in good hands for the future, resulting in a smooth transition that’s beneficial for all involved.

The main obstacle for management buyouts is that the managers may not necessarily have the resources or funding to buy the business. This can also be an issue for business acquisitions. But there are tried and tested options available.

How do you get an acquisition or management buyout loan? 

There are several routes available if you’re looking to buy a business, and these are available even if you’re not an experienced business owner. Options include:

Business loans 

One of the most common ways to finance an acquisition or buyout is through a business loans, which allows you to borrow up to £2M for buying a business.

Equipment refinance 

Another option for asset-rich businesses is using equipment refinance to leverage their existing assets for a management buyout, which will allow you to release roughly 80% of the business’s current equipment value as working capital (you can carry on using the equipment while it’s on refinance).

Franchise finance

If you’re looking to take on an existing franchise such as a coffee shop or fast food restaurant, then there’s always the option of franchise finance, which can fund the entire franchise cost.

What other loans are available to help for buying an existing business? 

Sometimes it’s not about raising the capital for initially buying a business, it’s about bringing something new to the table through modernisation or simply just giving things a refresh.

There are options available if you’re looking to fund new equipment, or even if you want to finance a refit of the existing premises (including building works and decoration so you can really make the business feel like your own). Wherever you need funding, there’s likely to be options available to help.

Can you get an unsecured business acquisition loan? 

Where possible we try to provide unsecured loans for management buyout or acquisition loans. We do also have access to lenders who are able to provide secured business loans.

Examples of business acquisition loans 

You can get financing for buying virtually any type of business you can think of. From dental practices and accountants to florists and hotels. Whatever you’re thinking of buying, we’d love to help.

How Origin Finance can help 

As a specialist broker in acquisition finance, we have access not only to high street banks but also to niche and private lenders. This means that we can find financial support for virtually all of your requirements.

We’ll help you prepare the paperwork, ensuring that your application is as strong as possible.

Reach out for a free, no-obligation quote to find out how we can help secure funding for your acquisition.

There’s never been a better time to start a new business. Last year we saw 774,420 new companies launch right here in the UK. That’s up 3.5% from 2021 and is 19% higher than just five years ago.

Starting your own business is a very large (but very rewarding) challenge that’s well worth undertaking. It’s also well worth starting to think about all of the financial options available to you, so that you don’t exhaust your cash flow too early, and to make sure that you’re well prepared for any bumps that you might face down the road.

One of the main hurdles entrepreneurs face is getting enough cash together to pay for the initial costs. Less than half of UK startups survive beyond their first five years, with the records showing that insufficient financing is the main reason for business failure among startups in 2022.

Virtually every business needs some level of finance to get going. Whether it’s for buying equipment, office space, or marketing, the costs for starting up a great business can really add up. And that can even be before your business has gotten off the ground.

Once you get going, you’ll also have to think about your ongoing cashflow to make sure that you’re agile enough to overcome any obstacles that crop up while you’re growing and building your financial stability.

Fortunately, there are several funding options out there to help you get your business up and running to the best possible start.

What are common options for financing new businesses or startups?

Some of the most common sources for financing new businesses or startups include:

• Equipment finance
• Fit out finance
• Business loans
• Invoice financing
• Vehicle finance

Each of these financing solutions caters to different needs and aspects of a new business, from purchasing the necessary equipment to setting up a physical location, managing cash flow, and acquiring vehicles for operations. Below, we explain each of these financing options.

Equipment finance 

All tech firms need computers, as restaurants need ovens and manufacturers need machinery. As such, equipment finance is an obvious choice for starter businesses that need to buy equipment that’s essential to their operation to get going (without having to fork out on an initial heft investment).

And it’s not just for “tangible” assets like computers and desks, or tables and chairs – it also cover “intangible” assets like software, signage or even AstroTurf so don’t be afraid to enquire about equipment financing even if your business has some unique needs.

Fit out finance 

When setting up a new physical location, fit-outs can be a big expense (even fit outs for small units can be pricey). Fit out finance helps new businesses by funding construction and renovation through monthly repayments as opposed to one big upfront payment – making things a bit more manageable. Like equipment finance, it covers both tangible and intangible items, making it a great option for a variety of business types, like shops, gyms and offices.

Business loans

Business loans are a go-to option for emerging businesses who are looking for a bit of flexibility with their funding. The money can be used for various things, from covering working capital and deposits to funding management buy-outs and acquisitions.

Invoice financing 

Invoice financing essentially turns outstanding invoices into immediate capital.

Instead of waiting for clients to pay their invoices— which can take weeks or even months— a business can access a significant percentage of the money that’s owed.

Sometimes this can provide a new business with a lifeline, but it also gives a bit of financial stability generally and is therefore an option for helping to navigate the unpredictable early stages of entrepreneurship.

Vehicle finance 

Vehicle finance, or commercial vehicle finance, allows businesses to purchase cars, buses, taxis, vans, etc – all of which generally have a large initial upfront payment.

Whether it’s for delivery services, employee transportation, or simply a company car, vehicle finance lets businesses acquire the vehicles needed for running their operations.

How Origin Finance can help 

Starting a finance business can seem daunting, but it’s entirely achievable with the right financing options and support.

Here at Origin Finance, we’d love to support your new business venture. If you let us know what you’re looking to finance, we can help you to find the most suitable funding solution. As we work with over 120 lenders, each specialising in different industries, we’re able to find the most competitive finance products for your new business.

And our team won’t just look at your numbers; we want to understand the people and the ideas behind your business to learn more about what you do and why you do it. We have proven that a compelling business story will significantly increase your chances of securing business finance.

We also offer flexible payment terms, including seasonal payments for seasonal businesses, and the ability to spread VAT throughout the finance period. In addition, our partnerships allow us to provide finance for new, used, or refurbished equipment, with no deposit required in many cases.

Find out about our turn-key new start finance solution, or get in touch for a free no-obligation quote without affecting your credit score.

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