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  • Writer's pictureMatt Bowler

Using Property Based Lending To Fund Business Acquisition

Updated: Oct 3, 2023

In this series of posts we look at ways to leverage current assets of the business to fund your buy out



Your ability to finance the deal will be at the top of your agenda if you're considering buying another company or buying the company you presently run from its current owners.


There might be some cash involved, but what other kind of loan is the most practical? To find an appropriate solution, we advise looking at the assets of the acquiring firm or your current business.


Based on a company's assets, asset-based lending makes use one or more of the assets the business already has, making it potentially more efficient and economical than looking for unsecured financing independently. This week we will look at property and land:


Property and Land


Any form of property or land owned by the company can be used to leverage funds, whether or not it has planning permission. If the company has equity in the building or land (over and above current secured debt), they can use a secured loan to release funds for the acquisition they are thinking about.


For instance:


You are looking a company with a property on balance sheet with a value of £1 million and an outstanding commercial owner occupier mortgage of £300,000.


You may be able to raise up to an additional 40% of the property value in cash, or £400k, through refinancing the property, making a major contribution towards your company acquisition, subject to credit assessment of the trading performance of the business.


To find out more please get in touch with matt@knightsrow.co.uk

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