Financing convenience store purchase

[Robert Thomas]

Hi,

I'm looking to see what is the best way to purchase a convenience store?

The business I'm looking at is a leashold around £80k +SAV.

Would I need to get a mortgage to purchase the lease and a separate loan for the stock or can I just take a loan to cover the total amount?

Thanks in advance!

 

[Mark T Jones]

What is the lease term?

What are you putting 8nto the deal?

If it’s a standard commercial leasehold, it offers a lender very little security. Stock offers no security, so it’s pretty likely that a lender would look to secure against something else.

 

[Robert Thomas]

Lease term world be 25 years and is secure to an extension.

I could put money/deposit in but that's where my issue would be. As if I have to put all my available money in it would restrict cashflow

 

[Mr D]

Hi,

I'm looking to see what is the best way to purchase a convenience store?

The business I'm looking at is a leashold around £80k +SAV.

Would I need to get a mortgage to purchase the lease and a separate loan for the stock or can I just take a loan to cover the total amount?

Thanks in advance!

If going for the cash option then you'd normally go for loan plus what you are putting in for the entire amount.
The stock is essential to the business so while its a variable kind of price it needs to be paid unless you want to totally restock.

Your money isn't itself part of cashflow. Keep some as reserve by all means - there will be times you may have to decide to put money into the business.
Ideally a decent business you are buying should have good cashflow. Or very quickly create good cashflow.

 

[Mark T Jones]

I’m not up to speed on commercial mortgages - there may be a broker on here possibly @Gordon - Commercial Finance

From memory, facilities against short(ish) leases are few and far between. If you do find a lender they will almost certainly require a hefty deposit (30% plus) and restrict the term to 10 years

Stocks are unsecured, so a lender will most likely require some security, unless you can get a Start Up Loan

Finally, if you haven’t done so, remember to factor in legal, survey and admin fees.

 

[Matthew Bailey-Jones]

If the business you are purchasing has a solid trading history which you can evidence by way of accounts, management information, and you have industry experience, then you may be able to obtain a secured commercial loan. You would need to provide P&L and cash flow forecasts.