Profitable enough to repay the debt, with room to spare. Acquisition lenders size their loans on the target's maintainable earnings: the profit it can reliably make year after year, once one-offs are stripped out.
What lenders look at
- Maintainable earnings, usually adjusted EBITDA: profit before interest, tax, depreciation and amortisation, with one-off items removed.
- Cash flow: whether that profit turns into cash that can meet the repayments.
- The trend: steady or growing profits are worth more than one good year.
- The quality of earnings: how dependent the business is on a few customers, the owner personally, or a single contract.
If profits are thin or the business is losing money
A cash-flow lender will struggle to fund it. Options can include a lower price, more vendor finance, asset-backed lending against what the business owns, or for a small purchase a Start Up Loan with a plan that addresses the losses. See Can I use a Start Up Loan or the Growth Guarantee Scheme to buy a business?.
Price matters too
If the asking price is more than the profits can support, lenders won't fund the gap. That's a sign to renegotiate, or to ask the seller to defer more of the price.
For more, read How to value a business you want to buy.
Last reviewed: 8 October 2026