Funding to buy a business or buy in
Finance to buy a business, buy out a partner or acquire a competitor.
Acquisition lending is assessed on the target’s numbers. Your broker explains what lenders will fund, what you need to contribute, and what security is expected.
What is a business acquisition finance?
Business acquisition finance is lending used to purchase an existing business, buy out a partner, or acquire a competitor, assessed primarily on the target’s historical earnings rather than the buyer’s trading history. Most structures require a deposit of 30–50% plus security.
Lenders approach an acquisition by asking whether the business being bought can service the debt used to buy it. That means adjusted earnings — usually EBITDA normalised for the vendor’s wages, one-off items and related-party rent — tested against the proposed repayments. A common benchmark is that annual debt service should not exceed roughly half of adjusted earnings, which sets a practical ceiling on the price a lender will fund.
Goodwill is the sticking point. Banks lend readily against tangible assets and property but cautiously against goodwill, so a $1.2m business with $300,000 of equipment might attract $400,000–$600,000 of debt against a 30–50% cash deposit, with the gap sometimes bridged by vendor finance. Where the buyer owns property, a secured structure can lift both the amount and the term considerably.
Timing matters more here than in most lending. Acquisition contracts carry finance clauses with real deadlines, and lenders need three years of the target’s financials, the sale contract, and often a lease assignment before they can commit. Your broker maps that document list to the contract dates at the start so the finance condition is not the thing that kills the deal.
Business acquisition finance at a glance
| Amount | $100,000 – $10,000,000 |
|---|---|
| Term | 24–120 months |
| Rate type | Fixed or variable |
| Indicative rates (Q3 2026) | 7.5% – 16% p.a. · see rate history |
| Security | Secured by property |
| Repayments | Monthly |
| Typical speed | 3–8 weeks |
| Best for | Buyers with industry experience, a real deposit and a target with three years of clean financials |
| Consider something else if | First-time buyers with no deposit, or businesses whose value is almost entirely goodwill |
| Tax | Interest on borrowing to acquire an income-producing business is generally deductible. Stamp duty and legal costs are usually capital. Confirm with your accountant. |
Advantages
- Buy established cash flow rather than building from zero
- Terms up to 10 years where property security is available
- Vendor finance can bridge the funding gap
Trade-offs
- Substantial cash deposit is almost always required
- Lenders discount goodwill heavily
- Approval timelines can strain contract finance clauses
How to apply for a business acquisition finance
- 01
Assess the target
Three years of the target’s financials, the sale contract or heads of agreement, and what tangible assets are included.
- 02
Structure the funding
Your broker sets the mix of deposit, secured debt, unsecured debt and any vendor finance, and tests it against lender servicing rules.
- 03
Approval to settlement
Formal approval, lease assignment, valuation where property is involved, then settlement alongside your solicitor and accountant.
Documents lenders commonly ask for
- Three years of the target’s financials and tax returns
- Contract of sale and any lease to be assigned
- Buyer’s personal statement of position, CV and industry experience
Lenders we compare for this
Westpac, NAB, Macquarie, Banjo and others on our panel. See the full panel.
Estimate your repayments
- Number of repayments
- 48
- Total interest (est.)
- $17,172
- Total repaid (est.)
- $92,172
This calculator provides an estimate only and does not account for fees, charges or the specific terms a lender may offer. It is not financial advice or an offer of finance.
Key terms
What is business acquisition finance?
Business acquisition finance is a loan used to fund the purchase of an existing business or a shareholding in one. Lenders assess the target business’s adjusted earnings, the assets included in the sale, the buyer’s deposit and any security offered.
How much deposit do you need to buy a business?
Most lenders expect the buyer to contribute 30–50% of the purchase price in cash or equity. Where the buyer offers property security, the required cash contribution can fall substantially.
What is vendor finance in a business sale?
Vendor finance is where the seller leaves part of the purchase price outstanding, repaid by the buyer over an agreed period. It bridges the gap between the price and what a lender will fund, and signals the vendor’s confidence in the business.
What is normalised EBITDA?
Normalised EBITDA is a business’s earnings before interest, tax, depreciation and amortisation, adjusted to remove owner-specific items such as above-market director wages, personal expenses and one-off costs. Lenders use it to estimate what the business will actually earn under new ownership.
Business acquisition finance FAQs
Can I use a business loan to buy another business?
Yes, acquisition finance is available, though lenders assess it more closely than a working capital loan. They typically want the target business financials, the sale contract, a handover plan and evidence you have relevant experience. Goodwill on its own is difficult to lend against, so many deals combine a cash deposit, vendor finance and a loan secured by property or the acquired assets. Franchise purchases are often assessed against the franchisor system rather than the individual site.