SO HOW DO YOU FIND THE CASH?

YOU can fund the buying of a small business through savings if you have them, or a loan from family, friends, or a bank. Business bank loans use a different set of criteria to personal loans.

Mark Neath, corporate finance director at Exeter-based financial adviser and accountancy firm Old Mill, explains: ‘A lender will look at the business’s profits and want to know that these will cover the loan repayments. This usually limits the amount that can be borrowed.

‘So you may need to be prepared to fund any gap from your own resources. Also, as the new owner, a bank will look to you to provide a personal guarantee to back any borrowing.’

Michelle Ovens, founder of Small Business Britain, warns that banks are cautious about lending due to the enduring legacy of the pandemic. However, Graham Jewell, of Stephenson Law, adds that as interest rates are currently at record lows it may be a good time to get a bargain loan deal.