A business purchase loan finances the acquisition of an existing business, covering the purchase price along with, in some cases, working capital to run it through the transition. It is assessed differently to a standard business loan, because a lender is not just looking at your own financial position, they are also assessing the business you are buying.
This guide covers how a business purchase loan works in Australia, how much deposit lenders typically expect, and what to have ready before you apply.
A business purchase loan is financed specifically for buying an existing, already trading business, as opposed to a startup loan for a new venture or a standard business loan for working capital in a business you already own. The lender is assessing two things at once: your own capacity to run and repay the loan, and the financial health of the business changing hands.
This dual assessment is what makes acquisition finance different from every other type of business lending covered elsewhere on this site, and it is why deposit requirements and due diligence sit at the centre of almost every search query in this space.
This is the single most common question in this space, and the honest answer is that it depends heavily on the type of business, its trading history, and whether you are offering security.
There is no single figure that applies across every purchase, which is exactly why comparing lenders properly, rather than accepting the first deposit requirement quoted to you, matters here more than almost anywhere else in business lending.
Beyond your own financial position, which is assessed the same way as any business loan application, lenders look closely at the business itself:
Both structures can apply, depending on what is being financed and what you can offer.
Secured business purchase finance uses property, or in some cases the assets being acquired, as security, generally unlocking a larger loan amount and a lower rate. Our Secured Business Loans guide covers how this structure works in more general detail.
Unsecured business purchase finance suits smaller acquisitions or buyers without property to offer as security, though typically at a higher rate and lower amount, similar to the trade offs covered in our Unsecured Business Loans guide.
Many acquisitions actually use a combination, a secured loan for the bulk of the purchase price alongside a smaller unsecured facility for working capital during the transition period.
Alongside your own financial documents, expect to provide, or arrange access to:
A lender’s own assessment of the business is not a substitute for your own due diligence, and issues that surface after settlement are yours to deal with, not the lender’s. The Queensland Government’s buying a business guide sets out a thorough due diligence process that applies regardless of which state you are buying in, covering financial records, existing contracts, leases, staff entitlements, and outstanding liabilities.
It is also worth checking the legal status of the business and its directors directly. ASIC’s register search lets you check company and business name details, which is a useful independent step alongside whatever the seller and their advisers provide.
This depends on the purchase price, the deposit you can contribute, the strength of the business’s own financials, and whether you are offering additional security. Run a scenario through our Business Loan Repayments calculator once you have a purchase price and likely rate in mind, to see what the repayments would actually look like against the business’s projected cash flow, not just the figure a seller or broker suggests it can service.
Our Business Loan Interest Rates guide covers what drives pricing more broadly, which applies here as much as to any other type of business lending.
Acquisition finance is one of the more complex corners of business lending, since every lender assesses goodwill, deposit requirements, and industry risk differently. Comparing that spread yourself, while also managing due diligence and a settlement timeline, is a lot to carry alone. Lodestar Finance compares business purchase finance across a panel of lenders, working through the deposit, structure, and rate options available for your specific acquisition.
FAQs
Typically 20% to 50% of the purchase price, though this varies significantly by lender, industry, and whether you are offering additional security. Vendor finance can also reduce the cash deposit required.
It is uncommon through mainstream lenders, though some acquisitions are structured with vendor finance covering part of the purchase price, effectively reducing the cash deposit you need to contribute yourself.
Yes, for smaller acquisitions, though typically at a higher rate and lower amount than a secured facility, and usually alongside a meaningful cash deposit.
A business purchase loan finances buying an existing, already trading business, and lenders assess that business's own financial history as part of the application. A startup loan finances a new business with no trading history, and is assessed purely on your own financial position and plan.
Yes. Independent due diligence, separate from whatever the seller or their broker provides, is a standard and important step before committing to any business purchase, regardless of how the finance is structured.
A fast business loan can genuinely settle within 24 to 48 hours in the right circumstances, but “instant approval” in the literal sense doesn’t exist
Getting a start up business loan is harder than financing an established business, because the thing most lenders rely on most, trading history, doesn’t exist
Having bad credit makes getting a business loan harder, not impossible. Mainstream lenders rely heavily on your credit file, but it isn’t the only thing
