Can You Do Seller Financing In The UK

Can You Do Seller Financing In The UK?

By Russell Bowyer

I was actually surprised to learn, that according to Chelsea Corporate, 60-90% of business acquisitions in the UK involve some form of seller financing.

You can do seller financing in the UK, where the seller lends the money to the buyer to buy their business. Actually, it’s the business itself that finances the deal and seller finance is used in many business acquisitions in the UK, and is a legally accepted way to fund the purchase of businesses.

I will admit, I thought it would be a lower percentage than that, but I’m so glad to read this, which is actually great news if you’re looking to buy a business, especially if you’re looking to fund the acquisition using seller financing.

Is seller financing a thing in the UK?

Seller financing is a thing in the UK, as 60-90% of small business sales involve some level of seller financing. So, in short, you can buy a business using seller financing in the UK.

The reason why I know you can do seller finance in the UK, is not just because Chelsea Corporate says so, but because I sold one of my UK businesses with seller financing, and I bought another business, in the UK also, using seller financing too.

Plus, on my journey to buy the business I bought, I found other businesses where I’d negotiated seller financing, but for one reason or another, these other businesses didn’t proceed to completion.

This high statistic of deals done in the UK with seller financing, suggests to me, that more and more business owners are recognising that the only way they can sell their businesses, is for them to accept seller finance. Otherwise they simply won’t sell their businesses.

Which on the face, should make it easier for you to find the right business to buy, if it’s your aim to use some level of seller financing to fund the acquisition.

But since writing a course that teaches you how to buy a business, which includes how to fund the acquisition using seller financing, I’ve discovered that most people live on the misapprehension that it’s just the buyer who is benefitting from financing the acquisition in this way.

I’ve even been accused, by a business broker, that because I teach people how to buy businesses using seller financing, that this is “predatory”.

I’ve included a screenshot of the conversation on Instagram, where the broker has referred to this as “such predatory terms”. I’ve hidden the details of this broker, because I thought this would be the right thing to do, but this conversastion can be found here: Bowravencourses, along with my other posts and reels.

Seller financing UK

Why this comment surprised me more, is because the broker concerned is based in the US, and seller financing is on the face, more prevalent in the America, as many of businesses listed online include seller financing as part of their sales particulars.

It’s comments like this one from a broker, why I feel it’s so important to understand how it is both sides of the transaction who benefit from seller financing, not just the buyer.

Which is why I created a video that discusses why a seller will finance the deal in this way, which you can read in this article “why would sellers want to finance a deal and offer seller financing” (and watch the video too, if you prefer).

It is both sides of the transaction who benefit from seller finance, be this in the UK, the US, or anywhere else in the world.

Is seller finance legal in the UK?

You may then ask, is seller finance legal in the UK?

The answer is most definitely yes, and so long as you draw up a legally binding agreement, seller financing is not only legal in the UK, but it is also legally enforceable too.

Which is why it’s so important to arrange seller financing over a period in which the business can afford the repayments, otherwise the deal will fail, which is no good for either party.

If you have any questions on this topic about buying a business, or on any other aspect about the process involved in buying a business, please drop a comment below.

And always remember that no question is a stupid question, if you don’t know it, you don’t know it, and by having the answer to a question you have, might be all it takes to move to the very next step in your journey to buy a business.