How to Finance your First Business Purchase - Hilton Smythe

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How to Finance your First Business Purchase

Are you looking to take your first tentative steps into the world of business ownership? Even if you haven’t yet pinpointed the exact property you wish you to acquire, experts agree that it’s a good idea to secure funding for the venture before proceeding too much further down the line. The majority of failed business deals collapse because the buyer overestimated their own available funds before entering into negotiations.

Fortunately, there are now a variety of ways in which you can secure financing for your first business purchase– even if traditional avenues of credit seem closed off. Below is a shortlist of some of the possible methods of funding your first foray into the world of business ownership, which should help to give you some food for thought when weighing up your options.

Commercial bank loans

The traditional method of financing a business purchase, bank loans have been difficult to come by for first-time buyers over recent years due to the 2007 recession and the attendant collapse of the housing market. However, with the British economy now showing signs of life and the UK government doing all it can to encourage small- and medium-sized business growth, high street banks are once again taking a more positive view of first-time commercial loans.

P2P lending

Peer-to-peer lending, known more colloquially as P2P lending, is an increasingly popular alternative to a traditional bank loan. With the interconnectivity of today’s global market, borrowers can use a P2P platform to reach private lenders, who will be more amenable to funding all or part of the required sum for a negotiable rate of interest. Although this form of credit is generally more prevalent among existing business owners, it can still be a viable method of finance for first-time buyers if they can demonstrate profitability in the business and expertise on their part.


Similar to P2P funding, crowdfunding opens up the borrower to a potentially worldwide audience – though more commonly, it’s a way for friends, family and like-minded people to invest in an idea they believe to be worth the risk. Compensation for the financing takes different forms, depending on the industry and individual involved; it could be a simple rate of interest, or a stake in the business, or a one-off opportunity (such as the chance to appear in a film in exchange for financing part of its production costs). It’s a highly innovative and modern method of financing which won’t suit all circumstances, but could represent a possible line of credit for those struggling with the traditional channels.

Equity finance

In contrast to the loans mentioned above, equity financing offers the lender a return on their investment in the form of shares or a stake in the business. While this may appear to be more affordable initially, it could end up costing the borrower significantly more in the long run – especially if the percentage is high and the business successful. As a result, it’s important to weigh up the pros and cons of any equity deal before signing on the dotted line to ensure you’re not left out of pocket further down the line.

Do your due diligence

Whichever form of finance you pursue for your first business purchase, it’s important to conduct thorough research and create a comprehensive business plan prior to applying for any of the above forms of credit. Not only will you paint yourself in a far more professional light and increase your chances of securing your desired funding significantly, you’ll also be better placed to avoid any unpleasant surprises as negotiations progress.

Hilton Smythe Finance

Hilton Smythe Finance are best suited to helping your business achieve its goals with minimum effort and fuss. With access to many lenders, we can source the best finance deals to meet your requirements and needs. Whether it’s looking for an appropriate business in your area, assessing the finances available to you, or tracking down a suitable lender, Hilton Smythe Finance has all of the tools and the know-how to make your first business purchase as simple as possible. For the inexperienced first-time buyer, such insight and expertise can be invaluable.

Get in touch and find out how Hilton Smythe Finance can help you achieve your business goals and make your first business purchase. Alternatively, give us a call on 01204 556 304 or drop us an email at today. We’re waiting to help!

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