Buying a retail business
Not only are we the experts in this form of commercial mortgage but we offer a free assessment of your freehold value, what you should offer and what we can raise for you.
With current uncertainty in the commercial real-estate market there’s never been a better time to make an offer and secure your freehold.
There are advantages and disadvantages associated with both freehold and leasehold purchases.
Funding is available for each, contact us to discuss your options
Accounts | Stock | Location
You need to understand exactly what you are getting, a business is about making money – not just the location. So check the accounts carefully. Stock is only worth taking over if it’s going to sell so look at delivery dates and identify non-selling lines.
Funding your shop purchase
Business loans and commercial mortgages
As one of the UK’s leading brokers for small business, your Acorn finance expert is the perfect guide to funding your shop purchase.
We’ll work with you to ensure you’re paying the right amount for the business and that there’s enough funding to cover the stock and all the fees.
With current uncertainty in the commercial real-estate market there’s never been a better time to purchase your perfect retail business at the perfect price.
The price is right!
Understanding what you’re getting
Only by knowing exactly what you’re getting will you be able to negotiate the right price. The value of any business is primarily based on it’s money-making ability. So the first port of call will be the accounts, see what the net profit and the EBITDA look like and identify areas to save money.
Next is the premises, are you buying the freehold or a lease?
Freehold values vary according to the property type and the location, Leasehold shop values are very dependent on the length and the terms of the lease so you’ll need to understand exactly what you’re getting.
Finally check the additional costs, especially the stock as that’s normally on top of the purchase price.
Freehold shop or lease?
Freehold mortgage or leasehold loan?
Why should you look at buying a freehold business rather than saving a lot of cash and buying a lease?
A freehold business includes the property, the “bricks and mortar” that you’ll be trading from. A commercial mortgage can be secured on the property (a lease is typically not considered suitable loan security). This allows you to borrow over a longer term, with lower monthly payments than typical lease rental payments.
You might need less deposit than you expect, as the best lenders in the market will lend more with the security of property in the background.
The lending on a leasehold shop will also depend on the remaining term of the lease – you’ll always want to know this and the rent review dates.
Location, Location, Location!
Expensive high street or low footfall secondary location?
Picking the perfect business in the right spot isn’t always easy.
Although opening a coffee shop next to a Costa might seem madness an area which draws coffee lovers might be better than somewhere totally unopposed.
Rents or property prices will be much higher on the high street but so will footfall.