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Buying a business

How much does acquisition finance cost? The rate is only part of the price

How much does acquisition finance cost? Interest is only part of it. Fees, security and the structure of the deal decide what you really pay.

Reading time 5 min read
Category Business guides
Written by The bizbritain team
How much does acquisition finance cost? There is no standard price. You pay interest, plus a set of fees that come with borrowing to buy a business. Lenders price each deal on its own facts: the profits of the business you are buying, the security behind the loan and how much of the price you are borrowing.
So the rate is only part of the cost. The structure of the deal often matters more, because it decides how much you need to borrow in the first place.

Section 01

What you pay beyond the interest rate

Interest is the cost most buyers think about first. According to the Bank of England, the average rate on new bank loans to small and medium-sized businesses was 6.63% in August 2026.
That is an average across all kinds of business lending. It is not a quote for an acquisition loan. Your own rate depends on the deal, and the offer will set it out.
The other costs are easier to miss, and most of them fall due around completion:
  • The lender's arrangement fee. This is charged for setting up the loan. It is often a percentage of the amount you borrow.
  • Valuation fees. A lender taking property or other assets as security will usually want them valued, and you pay for it.
  • Legal fees. You pay your own solicitor. Buyers often pay the lender's legal fees too.
  • Accountant's fees. Financial due diligence and tax advice on the structure are a separate bill.
  • Tax on the purchase. On a share purchase you usually pay Stamp Duty at 0.5% of the price. VAT can apply to an asset purchase unless it counts as a transfer of a going concern.
There is one more cost that is not a payment. Many lenders ask for a personal guarantee. That puts your own assets behind the loan if the business cannot repay it.

Section 02

Five things that move your price

Two buyers can borrow the same amount and pay very different rates. These are the five things that usually make the difference.

  1. The profits of the business you are buying

    Steady, provable profit is the strongest thing a buyer can show. A lender wants to see the business can pay the loan from its own earnings.

  2. The security behind the loan

    A loan secured on property or equipment is usually cheaper than an unsecured one. The lender has something to fall back on.

  3. How much of the price you borrow

    The more you and the seller put in, the less the lender carries. A smaller share of the price usually means a lower risk, and a better price.

  4. Your experience and credit history

    Lenders look at whether you have run a similar business before. A clean credit record helps too.

  5. The sector and the lender's appetite

    Some lenders like certain sectors more than others. The same deal can be priced differently by two lenders on the same day.

The way the debt is layered matters as well. Senior debt is usually the cheapest part, because it is repaid first. Mezzanine finance sits behind it and costs more.

Section 03

How seller payments cut what you borrow

Many sellers do not take the whole price on the day. Part of it can be paid later, in fixed amounts. That is called deferred consideration.
Here is a simple example. Say a business costs £600,000. You put in £120,000 and the seller agrees to take £150,000 over two years. You then need to borrow £330,000, not £480,000.
A seller can also lend you part of the price, called a vendor loan. The interest on it is agreed with the seller. Lenders often see money left in the deal by the seller as a sign of confidence in the business.
A smaller loan means less interest, and often a lower arrangement fee. If part of the later payment depends on how the business performs, that is an earn-out. Our guide on how an earn-out works when you buy from a retiring owner explains the difference.

Section 04

How much does acquisition finance cost to arrange?

Compare offers on their whole cost, not the headline rate. Put the rate, the fees, the term, any early repayment charges and the security side by side. A cheaper rate with a large fee and a personal guarantee can cost more than it looks.
A broker can look at the deal across a wider range of lenders and set the offers out on the same basis. With bizbritain, you pay us nothing unless a lender on our panel issues an Agreement in Principle. On advisory transactions we take no commission from lenders, so we are paid by you and not by them.
If you are pricing a purchase now, we can help with business acquisition finance from the first figures to completion.

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

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