Securing Loans To Purchase An Existing Business

push_up_pro

Hey guys, I'm trying to secure funding to purchase an existing cafe with no capital or assets behind me. I'm looking for a substantial figure of around £75k, I'm not sure where to start as I would need a loan that doesn't need any kind of guarantor. Can someone help or give me any advice that would point me in the right direction? 

Hoenir

Realistically your chances are pretty close to zero. That sort of sum is going to require tangible security of some kind. Lenders aren't going to take a punt on a business which is on a sector where many ultimately fail. 

CliveOfIndia

^^^^^

This.  And you'd need to be looking at a business loan rather than a personal loan, which almost always require you to invest a sizeable sum yourself - and even then, you'd need a sound business plan, historical accounts, P&L figures, etc.

Tucosalamanca

What does the £75k get you?

Are you buying a freehold business or an ongoing concern (effectively taking on the current lease)?

The current owner is looking to exit and will have ongoing bills to pay every month. Is the business currently profitable?

Since you're looking to take over the business, you should have good idea of the current financial situation.
How much does the current owner 'need' to get out?

Your business plan should have all of this figured out. How long before the loan and interest are paid back?

Also bear in mind that you'll need several thousand to cover legal and property fees (deposits, quarterly rent in advance and so on)

Personally, unless it's clearly profitable, which seems unlikely based on the listed price, I would be offering a small token sum to take over (£5,000 plus their expenses?)
Overheads can become a painful liability if they're not making much money.
Every month that passes hurts more and more.

Cafe business is not an easy one to make money or even 'exist'.
There are low barriers to entry and entrepreneurs (with money) will be all over any good opportunities that arise.

If the business has potential and you can present a viable business plan, why not approach your bank and apply for a start up loan?
If the bank won't lend, it's a good indication that the business has little chance of success.

Good luck with it...

MEM62

A loan for a business would usually require a solid business plan plus you putting up 50% of the investment.  In your case £37.5k.  The lenders stance will be why should they risk money on your business if you are not prepared to risk any of your own.  By wanting to borrow the whole £75K you are asking them to take 100% of the risk.  That is not going to happen.