How Much Deposit Do You Need to Buy a Business in the UK?

Most buyers need between 10% and 50% of the purchase price. The range is wide because lenders set the deposit by what the business owns, not just what it is worth. A business with a freehold building and £200,000 of machinery may need a deposit towards the lower end. A consultancy with a laptop and a client list will usually need one towards the top.

If you have seen conflicting figures online, that is why. Below, we explain what moves the number, what counts as a deposit, and how it plays out on a worked £500,000 deal. If you are earlier in the process, our guide to buying a business covers how we help from first enquiry to completion.

Buying a business is not like buying a house. With a house, the lender values the bricks, and if repayments stop they can sell the property and recover their money. The rules are consistent, so the deposit is too.

With a business, there is often little to sell. If a marketing agency fails, the lender cannot repossess its client relationships. The clients simply leave. So the lender is really backing the profits to continue, and they want you to have enough of your own money in the deal to make sure they do.

That one idea explains almost everything else on this page.

Lenders split a purchase price into two parts. Tangible assets are things like property, machinery, vehicles, stock and unpaid customer invoices, all of which have resale value. Goodwill is the reputation, customer relationships, brand, staff and track record of profit. It is real value, but you cannot sell it at auction.

Lenders are comfortable lending against the first and far more cautious about the second. A deal that is 80% goodwill will need a much larger deposit than one that is 80% freehold property.

This is the biggest single lever. If the business owns its premises, that part of the deal can often be funded with a commercial mortgage at around 65 to 75% loan-to-value (the loan as a percentage of the property’s value). That is cheaper, and allows more borrowing, than lending against goodwill.

A buyer who has run a care home for twelve years and is buying another is a different risk from someone leaving corporate life to buy their first. Lenders call this relevant management experience, and it can be worth around ten percentage points of deposit.

Lenders like predictable. Several years of steady profit, a healthy spread of customers, recurring contracts and low churn can all reduce the deposit. Lumpy profits, one customer making up 40% of revenue, or a business that depends on the seller personally will push it up.

Equity in your home, or assets in a business you already own, can stand in for cash. Many buyers reach a workable deal this way without writing a large cheque. Owning a home is not essential, but it often gives you more options.

These are indicative market ranges, not offers or promises. Lenders differ, which is why the same deal can get quite different answers from different lenders.

Scenario A: a recruitment agency

The agency is priced at £500,000. It owns about £15,000 of office equipment and has £60,000 of unpaid client invoices. Everything else is goodwill. With so little to recover, a lender might fund 55 to 60% of the price, say £280,000. That leaves a deposit of £220,000, or 44%.

Scenario B: an engineering firm in a leasehold unit

Another £500,000 deal, but this business owns £185,000 of CNC machinery outright and holds £70,000 of stock. The funding can be built in layers: a £250,000 acquisition loan plus £110,000 of asset finance secured on the machinery. That is £360,000 in total, leaving a deposit of £140,000, or 28%.

Scenario C: a business with a freehold workshop

Again £500,000, of which the freehold is worth £310,000 and the remaining £190,000 is goodwill and equipment. A commercial mortgage at 70% of the property value gives £217,000, and an acquisition loan against the trading side adds £105,000. Total funding is £322,000, leaving a deposit of £178,000, or 36%.

Same headline price, three different deposits. Notice that Scenario C, despite including property, is not the lowest. The freehold only helps on the portion of the price it represents, and the trading element is still goodwill-heavy. So rather than asking “what deposit do I need?”, ask “what does this specific business own, and how does that split the funding?”

Not sure how your target business would split? Book a free consultation and we will talk it through before you commit to a price.

Lenders are often more flexible here than buyers expect. Your contribution does not have to be cash in a savings account. Lenders commonly accept:

• Cash savings, which are the cleanest and fastest to evidence
• Equity released from your home through a remortgage or second charge
• Proceeds from selling another business or property
• A gift from family, if properly documented and non-repayable
• Investment from a partner taking equity alongside you
• In some structures, deferred payment agreed with the seller

They are far less likely to accept money borrowed on credit cards or personal loans, which lenders check for and which can sink an application. The same goes for funds whose source you cannot evidence, or money you will need straight away for working capital.

Your deposit is also not the only cash you need. Budget separately for legal fees, due diligence, lender arrangement fees and, above all, working capital for the first few months. Suppliers often tighten terms after a change of ownership, and some customers wait to see how the new owner performs. Arriving at completion with an empty bank account is one of the most common ways a good acquisition goes wrong.

If the figure you have been quoted is out of reach, the deal is not necessarily dead. The seller may agree to take part of the price over two or three years, known as deferred consideration. Lenders often treat a properly structured deferral as comparable to your own money, which reduces the cash needed at completion. You can also release cash from machinery or vehicles the business already owns outright, bring in an equity partner in return for some ownership, or restructure the price so that value is allocated differently between goodwill, assets and stock.

You may see “no money down” offers marketed heavily. In practice this usually means the cash comes from somewhere other than your savings, such as seller financing or refinancing the target’s own assets. That can be a legitimate structure, but it is not the same as no contribution. Lenders want you to have a stake in the outcome.

Government-backed lending can also help. The British Business Bank’s Growth Guarantee Scheme gives accredited lenders a 70% government guarantee, which can make them more willing to lend. The guarantee protects the lender, so you remain liable for the debt. In July 2026 the Chancellor announced an expansion, including a higher turnover limit of £54m (up from £45m) and terms of up to ten years on loans of up to £1.1m. Lenders are still putting the changes into practice, so check current terms before relying on them.

The best time to speak to a broker is before you agree a price, because how a deal is structured determines what a lender will fund, and that in turn determines what you can afford to offer.

At Pinnacle Business Finance, we source and compare acquisition funding from a broad range of lenders, from high street banks to specialist acquisition lenders, and we will give you an honest view of what is likely to be fundable before you spend money on legal fees. You can read more about how we help on our buying a business page.

This article is general information, not financial advice. Lending criteria, tax rules and scheme terms change, and any funding is subject to status and lender approval. Take professional advice specific to your circumstances before committing to a transaction.