Right now, buying a business probably isn’t at the forefront of your mind. But every crisis and recession must pass and, at some point, M&A shall return to something resembling “normality”. However, as the chronically-overused phrase “new normal” suggests, what is normal may be radically different.

Even among businesses that survive, the post-coronavirus market is likely to see many business owners seeking an exit, for whatever reason, and just waiting until the market picks up before they do. If you’ve been considering acquiring a business then coronavirus has probably interrupted your plans, but it could lead to very favourable conditions a little further down the line.

So, what if you’re a first-time buyer, or someone looking to make an acquisition on a shoestring budget, or just someone interested in funding your purchase a little differently, what are some of the financing methods you might turn to in the post-coronavirus economy?

Seller financing

Seller financing may not sound like an innovative form of financing, but it is certainly a different way of conducting an acquisition, and one that holds considerable benefits for both buyer and seller. Through seller finance, the seller provides a form of loan to the buyer to facilitate the purchase, with legally-binding terms forming part of a purchase agreement.

You, the buyer, will typically make a down payment, which will be followed by monthly repayments at an agreed-upon interest rate and over a set timescale after you’ve taken over the business. Once your repayments are fulfilled, the transaction is completed and you own the business outright.

Seller financing offers numerous benefits. Most significantly, for a buyer, it offers you the chance to purchase a business with an upfront fee (the down payment) that is a fraction of the normal acquisition price.

Also, seller financing removes the middle man from your negotiations, allowing you to go directly through the selling party for your financing, rather than through a bank. The repayments may impact your bottom-line, but if you’re set on buying a business, then seller financing can offer you the chance.

Peer-to-peer financing

If you’re a new buyer, peer-to-peer (P2P) lending through an online investment platform can be the ideal way to fund your acquisition. P2P lenders typically have less stringent credit checks, meaning you can access financing without an immaculate, years-long credit history, and often loans from P2P networks will get into your account much quicker, speeding up the acquisition process.

P2P lenders also often offer lower interest rates than traditional lenders and can have a smoother administrative process. They may also be more flexible in meeting your requirements, whereas traditional lenders may have set-in-stone policies.

However, new P2P lenders spring up everyday and regulation of the sector by financial authorities is a process that is still being perfected. Make sure you do as much research as possible before settling on a peer-to-peer lender to fund your acquisition.

Microfinancing

Microfinancing is another form of funding typically offered by non-traditional lenders. Microloans are smaller than traditional loans and generally have shorter repayment periods. As with P2P lending, the fact that they are not through traditional lenders, and because they are smaller, they can be easier and quicker to get than a classic bank loan.

Again, this is a form of financing you’ll want to do as much research on as you possibly can, to ensure you get the best loan, with terms that work for you. Obviously, the size of microloans (generally under £50,000) means they will typically be most useful for a business acquisition alongside another form of financing.

Crowdfunding

Crowdfunding has seen a meteoric rise as part of the “shareconomy” boom of the 2010s, allowing people to raise money for any cause imaginable purely through the generosity of friends, strangers and anyone in between.

As a method of financing a business acquisition, crowdfunding is likely to be a bit of an outside bet. The most successful crowdfunders, the ones that attract the most interest and contributions, are generally charitable in nature. If you’re attempting to buy a business in this way, it is likely to be an unreliable and time-consuming strategy.

However, if it’s the path you choose then you can increase the effectiveness of your campaign by introducing a rewards system for contributors. Offering incentives of some kind will help attract contributors, but will require you to get a bit creative. One of the core benefits of crowdfunding a business acquisition is that the campaign itself is a form of viral marketing and you can convert contributors into a ready customer base.


These are just a few options to illustrate the fact that you don’t need to be flush with cash to consider buying a business. The current crisis will of course cause considerable difficulties for many business owners and entrepreneurs, but opportunity does lie on the horizon, no matter how far the horizon might be. When it comes to financing, funding acquisitions will only become more creative and acquisitions themselves will, perhaps, be more accessible.