A third of commercial finance brokers have struggled to find lenders willing to fund business acquisition deals, according to survey data from Asset Advantage.
Alongside difficulties with lender appetite, 20% of brokers reported challenges securing the right loan value for potential acquisitions.
Brokers also highlighted issues with gathering necessary information and understanding the mechanics behind acquisitions as well as funder appetite.
Given these challenges, only 57% of brokers have been successful in obtaining funding for business acquisitions.
One broker said: “Acquisition finance lenders tend to be split in the sub-£250k and over £1m.
“Those funding less than £250k struggle to get their heads around the deal and kill the deal with volume of information required.
“Those above £1m can be difficult to build relationships with and their debt quantum can be restrictive.”
The findings were part of a broader survey by Asset Advantage, which regularly assesses the changing demands of the commercial finance market and the key challenges brokers face in securing funding.
Philip Knight (pictured), credit and risk director at Asset Advantage, said: “Even in the challenging climate of the last couple of years, the strategic need for acquisitions and MBOs continues – as does the need for help funding these deals.
“Our latest research highlights a real issue though, with commercial brokers being held back by lender appetite, loan values and in some cases, a lack of knowledge to capitalise on these deals or find the right lenders.”
Knight added: “Acquisition finance requires a funder to have experience in both the underwriting and execution of transactions.
“The highly experienced team at Asset Advantage fulfils both elements of this requirement.
“The former enables us to get to proposals that are beyond some lenders, and the latter should give introducers the confidence to take on these non-vanilla deals.”
