Quick answer
A business acquisition loan funds the purchase of an existing business, a competitor or a partner's share. Banks often want large deposits and years of financials, so many buyers use property-secured alternative loans, starting at $20,000 and reaching $5,000,000, to fund the deposit, the whole purchase or a bridge until bank finance is approved.
Key points
- Funds buying a business, a competitor or a partner's share
- Property security often replaces a large cash deposit
- Can bridge until bank finance is approved
- The target business's records matter as much as yours
Why acquisitions stall at the bank
Buying a business is one of the riskier things a bank can fund. The goodwill is hard to value, the buyer may be new to the business and the seller’s records are not always tidy. So banks ask for big deposits, long track records and a lot of time. Deals with settlement deadlines and motivated sellers do not always wait.
Ways to fund an acquisition
| Structure | When it fits |
|---|---|
| Property-secured loan for the full price | You have strong equity and want certainty |
| Property-secured loan for the deposit | Bank funds the rest, but needs more cash in |
| Bridge until bank approval | Settlement date is before the bank is ready |
| Vendor finance plus a loan | The seller accepts part payment over time |
Property-secured loans run $20k to $5m, and no valuation is required up front and interest that can be prepaid or added to the loan, which protects cash flow in the first months of ownership.
What strengthens the deal
- Clear records for the target business: bank statements, BAS and financials.
- Your relevant experience in the industry.
- A realistic plan for the first year, including any changes you will make.
- Professional advice on the contract and due diligence.
Partner buyouts
Buying out a partner is often easier to finance than buying a stranger’s business, because the buyer already knows the business and the records are familiar. Lenders still want to see that the business can carry the debt without the departing partner’s contribution.
Plan the first ninety days
The cash needs of a newly bought business are easy to underestimate: stock, wages through the handover, new systems. Our guide to financing a business purchase covers this, and the cash flow gap calculator helps you model it.
Due diligence the lender will expect
Lenders funding an acquisition want to know the business is what the seller says it is. Expect to provide the sale contract, at least a year of the target business’s bank statements, recent BAS, any lease and its remaining term, key supplier and customer arrangements, and details of staff and their entitlements. Gaps in the seller’s records are one of the most common reasons acquisition finance slows down, so ask for them early.
Also check whether the business has any tax debts or security interests registered against its assets. A search of the Personal Property Securities Register can reveal equipment or stock that is already financed.
Funding the first months
New owners often need more than the purchase price: stock to rebuild after the handover, new systems, branding, and a buffer while customers get used to the change. Build those needs into the funding plan from the start rather than coming back for a second loan a few months in.
Start with the deal
Take a minute to enquire with the price, the settlement date and the security available. There’s no credit check upfront, someone experienced reviews it, and nothing is passed on. Ask about acquisition finance.
Frequently asked questions
How much deposit do I need to buy a business?
Banks often want a substantial deposit. With property equity, an alternative lender can fund part or all of the purchase, reducing the cash you need.
Can I buy out my business partner with a loan?
Yes. Partner buyouts are common, and lenders look at the business's trading and the security available.
What documents does the lender want?
The sale contract, the target business's financials or bank statements, your own identification and, for secured loans, property details.
Can the business I am buying secure the loan?
Business assets can help, but lenders usually prefer property security for acquisition funding.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a person who handles unusual deals calls you back.