Funding to buy a business

Buying an established business can be faster and less risky than starting from scratch. You inherit customers, staff, systems and a track record. Funding the purchase, though, is different from funding an existing business, because most of what you are buying is goodwill, and goodwill is hard to lend against.

How business purchases are usually funded

Most purchases are a blend:

1. Your own contribution, from savings or equity.
2. Vendor finance, where the seller accepts part of the price over time.
3. A business loan, often secured on property owned by the buyer.
4. Working capital funding for the period after settlement.

Why property security matters

Lenders are comfortable lending against tangible assets: property, equipment, sometimes stock. Goodwill, the value of the business’s reputation and customer base, can disappear if the business stumbles. That is why property-secured loans from $20k to $5m are common in business purchases. No valuation is needed, and interest can be paid up front or capitalised during the handover period, when cash flow is often unpredictable.

Weighing it up? You can check your eligibility without any credit check, then decide in your own time whether to go further.

What lenders and you should look at

Area	What to check
Financial history	Two to three years of financials, tax returns and BAS
Customer base	Concentration on a few clients, contracts, churn
Staff	Key people, entitlements owing, award obligations
Premises	Lease term, options, rent reviews
Assets	Condition and value of equipment and stock
Liabilities	Any debts or obligations passing to the buyer

ASIC’s registers and the Australian Business Register help confirm who you are dealing with. Your accountant and lawyer should review the numbers and the contract.

Budget beyond the price

• Stamp duty or transfer costs where they apply in your state.
• Legal and accounting fees.
• Stock at settlement, which is often valued separately.
• Working capital for wages, suppliers and rent in the first months.

Buyers who stretch everything to meet the price often struggle in the first quarter. Our guide to funding a business purchase covers structuring in more depth.

In a nutshell

• Goodwill is hard to lend against, so property security often matters
• Lenders look at the target’s history and your experience
• Budget for working capital after settlement, not just the price
• Get proper due diligence before you commit

What happens when you enquire

Everything starts with a short enquiry: how much, what for, how long you have traded, roughly what you turn over and whether there is property in the picture. A person, not a scoring engine, reads it and calls you. They ask for the evidence that actually decides the loan, explain the realistic options and give you the full cost in writing. Nothing goes ahead, and no credit check is run, until you say yes. On a complete file, approval within the hour is possible. Every step is explained as it happens, so you always know what is being checked and why.

A quick test before you borrow

Good borrowing has a job and an end date. Before you enquire, write down in one sentence what the money is for and how it will be repaid. If that sentence is easy to write, you are probably in the right place. If it is not, it is worth a closer look at the business’s cash flow before taking on new repayments.

Paperwork worth gathering

Have these within reach and the process moves quickly, because each one answers a question the assessor would otherwise have to come back and ask:

• ABN, business structure and how long you have traded.
• Recent business bank statements, ideally shared online.
• What the money is for and how it will be repaid.
• Any tax debt, default or arrears you should mention up front.
• Contact details for anyone else who would need to sign.

A quick word on the enquiry form

Late surprises are what slow funding down. A second property owner nobody mentioned, turnover that is lower in the statements than on the form, an amount that doubles after the first call: each one sends the assessment back to the start. If you tell us the full story at the beginning, even the awkward parts, the file only has to be worked through once.

Take the next step

It costs nothing to find out. Check your eligibility in about a minute, with no credit check and no obligation. One team handles your enquiry from start to finish, and you will hear from a person, not an automated system. Fill the form in as accurately as you can; a careful minute now saves days later.