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Buying a business

Agreement in principle to completion: what can still change on a business purchase loan

An agreement in principle on a business loan is not a yes. Here are five things that can still change before completion, and what to do about each.

Reading time 5 min read
Category Business guides
Written by The bizbritain team
An agreement in principle on a business loan means a lender is willing to look properly at your purchase. It is not a promise to lend. Before the credit-approved offer, the lender checks the business, the price and you. The amount, the terms or the answer can still change in that gap.
Most of what changes can be seen coming. This guide covers what an agreement in principle does and does not commit a lender to. It then sets out the five things that most often move, and what you can do about each one.

Section 01

What does an agreement in principle on a business loan commit the lender to?

Very little, on its own. An agreement in principle comes before credit approval. It says the lender would consider the deal, based on what it has seen so far.
The credit-approved offer is a separate, later step. The lender makes it only after its full checks. That offer is the one that sets the amount, the rate, the security and the conditions you have to meet before the money moves.
So treat the agreement in principle as a strong start. It tells you the deal is worth pursuing at roughly this size. It does not tell you the deal will be funded on these terms.
With bizbritain, the agreement in principle is also when our engagement letter arrives. You pay us nothing unless a lender on our panel issues one.

Section 02

Can a lender still say no after an agreement in principle?

Yes. Here are the five things that most often move between the agreement in principle and the credit-approved offer.

  1. What due diligence finds

    Your accountant, your solicitor and the lender all look closely at the business. They can find something the summary figures did not show, such as a lost customer, an unpaid tax bill or a problem with the lease. Any of these can change how much a lender will lend.

  2. The profit the lender believes in

    Lenders lend against the profit they expect to keep coming in after you take over. One-off income, or costs that will rise once the seller leaves, can lower that figure. A lower figure can mean a smaller loan.

  3. Security and personal guarantees

    The agreement in principle may not say what security the lender wants. The credit-approved offer will. Ask early whether a personal guarantee or a charge over assets is likely, so it is not a surprise at the end.

  4. The interest rate

    The Bank of England raised Bank Rate to 4% on 4 November 2026. If your rate is set at the offer rather than earlier, a move like that can raise your monthly repayment. Ask when your rate is fixed, and check the deal still works at a higher one.

  5. Time

    An agreement in principle usually has an expiry date. So does the exclusivity the seller has given you. If either runs out first, you may have to start again or compete with another buyer.

Our guide to what a lender checks in due diligence covers the first two in more detail.

Section 03

How to keep exclusivity and the lender's timetable in step

Exclusivity is the period when the seller agrees not to deal with anyone else. It is usually set in the heads of terms. The lender's checks have to finish inside it.
Ask the lender, or your broker, how long its checks usually take for a deal like yours. Then compare that with the exclusivity you have. If the two do not fit, ask the seller for longer before you sign the heads of terms, not after.
Send the lender what it asks for quickly, and in one go where you can. Book your accountant and solicitor early so their work runs alongside the lender's. Our realistic timeline for buying a business shows how the stages overlap.

Section 04

If the offer comes back lower than the agreement in principle

A lower offer is not always the end of the deal. It usually means the lender has found something that changes the risk. Find out exactly what it is.
You then have four common options. You can ask the seller to lower the price, using what due diligence found. You can ask the seller to leave part of the price in the deal and be paid later. You can put in more of your own money. Or you can take the deal to another lender.
That last option works best before exclusivity runs out. An acquisition finance broker can look at the deal across a wider range of lenders. It can also tell you early which of the four options is realistic.

This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.

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