Finance to buy an existing business or franchise
Finance to buy an existing business is usually a stack, not one loan: your own savings, lending secured by property or the business itself, sometimes vendor finance from the seller, and for a franchise, lenders that know the system. A finance broker puts the deal in front of lenders whose appetite fits; the lender decides.
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What is business acquisition finance?
Business acquisition finance is business-purpose lending arranged to buy an existing business or a franchise, as distinct from a loan to start or grow one. The lender assesses two things at once: the business being bought (its earnings, lease, assets and price) and you (your contribution, security, experience and how the business would service debt under you). A purchase is commonly funded by several of these pieces at once, so the structure matters as much as the amount. 121 Brokers is a finance broker, not a lender: we arrange business-purpose finance through third-party lenders on our panel, and the lender decides the amount, the structure, the pricing and the outcome. We are typically paid a commission by the lender when your finance settles. We do not sell, value or list businesses.
How much can you borrow to buy a business?
How much you can borrow to buy a business is set mainly by four things: the earnings of the business you are buying, the security you offer, the cash or equity you bring, and whether the business would service the debt under your ownership. Each lender weighs those differently, so there is no fixed figure or percentage of the price.
The earnings matter because the lender is being asked to fund a price that someone else set. Lenders typically rebuild the profit figure from the target's tax returns, BAS and management accounts, strip out what the current owner takes and what will change under you (rent, wages, your own drawings), and test whether what is left covers the repayments. That is the serviceability test, and it is run on the business as you will run it, not as it was run. The security you bring then shapes how much of the price a lender is comfortable advancing and on what terms, and your contribution fills the gap between the two. A planning view of your own serviceability is in the borrowing power calculator, a general tool, not a quote. For a purchase, the sharper question is whether the price stacks up against the earnings, and that is a conversation to have before you make an offer.
How a business purchase is usually funded in Australia
The price is a set of parts, and each part can carry its own finance. The lender funding the goodwill is not always the one funding the ute.
Property-secured lending
Equity in a home, an investment property or a commercial property is commonly how an owner-operator funds the bulk of a purchase. The lender takes a mortgage over the property and advances a term loan against it; lenders generally advance more against property than against the business alone. The risk is the obvious one and it needs saying plainly: if the business fails, the property is on the line. Read how secured business loans work before you commit a home to a purchase.
Lending against the business's earnings (goodwill)
Goodwill is the part of the price above the value of the plant, stock and other tangible assets: what you are paying for the customers, the brand and the earnings they produce. Some lenders will fund part of it, sized on verified profit rather than on bricks, mostly in sectors where they have a lending track record, such as professional practices and franchise systems they know. Lenders generally will not fund the whole price against goodwill. Where it is offered, it commonly sits alongside security over the business (a general security agreement registered on the PPSR) and a personal guarantee from the directors.
Asset finance for plant, vehicles and fit-out
Plant, equipment, vehicles and sometimes fit-out can be carved out of the purchase price and financed on the assets themselves, usually as a chattel mortgage or a lease. That lowers the amount that has to be covered by goodwill lending or property, because the ute and the ovens now carry their own security. It is also why the price split in the contract matters: the lender needs to see what it is funding. See equipment finance and business vehicle finance for how those facilities run, and chattel mortgage versus lease for the structural choice.
Stock and working capital for day one
Stock is often priced separately in the contract, at valuation on the day of settlement, and the first months of trading need cash before the till catches up. Stretching the acquisition loan to cover both is a common mistake. A line of credit, trade finance for stock you import or buy on terms, or invoice finance if the business carries debtors can each fund that part, leaving the purchase facility to do one job.
Vendor finance
Vendor finance is where the seller leaves part of the price in the business as a loan you repay over an agreed period. It is a structure the two parties negotiate and the solicitors document in the sale contract, and it can bridge a gap between what a lender will advance and what the seller wants. Lenders typically expect it to be disclosed and count it as debt when testing serviceability, and it is commonly subordinated, meaning the primary lender is repaid first. Take legal and accounting advice before you agree to it, and never leave it out of the application.
Your own contribution
Every structure above assumes you bring something: cash, equity in property, or both. Lenders typically expect a meaningful contribution, and the size they look for varies with the sector, the security on offer, the quality of the target's financials and the lender's own appetite. There is no single percentage, and the figure any one lender looks for is its own and can change. What a broker can tell you is what the panel commonly expects for a file like yours, before you make an offer. See secured versus unsecured business loans for how security changes the lender's view.
Put together, a purchase might look like this, in words only because every file is different:
- part on a term loan secured by the buyer's property
- part on asset finance over the plant and vehicles
- part left in by the seller as vendor finance
- the balance from the buyer's own funds
- stock at valuation and early working capital on a separate facility
Buying a franchise: how lenders look at it
Franchise finance is business-purpose lending used to buy into a franchise system, whether an existing outlet or a new territory, and lenders read a franchise file differently from a standalone business. Some lenders run accreditation programmes for franchise systems they have assessed: an accredited system generally comes with a defined process and a greater willingness to lend against the business itself, while a non-accredited system is treated as a standard business purchase and leans more on your property and contribution. Either way, lenders generally want the franchisor's approval of you as a franchisee before they complete their assessment, and they read the franchise agreement and the disclosure document alongside your financials.
Term is the detail that catches people. Lenders typically match the loan term to the shorter of the franchise agreement and the lease, because a loan cannot sensibly outrun your right to trade under the brand or from the premises. A short agreement with no renewal option, or a lease with little time left, shapes the whole structure.
Some franchisors offer finance or introduce a preferred lender. That is one option, not the only one, and it is compared like any other on rate, fees, term and security. Franchisors usually know which lenders have accredited their system; ask them, then bring that list to us and we will tell you which of them we can approach and how the rest of the panel compares.
What lenders typically ask for
A purchase file is heavier than a growth loan because the lender is underwriting a business it has never seen trade under you. Below is what lenders typically ask for. Individual lenders add to it; a broker assembles it once, in the order the lender reads it, so the lender's assessment and your due diligence run together.
| Typically requested | Why the lender wants it |
|---|---|
| Two to three years of the target's financial statements and tax returns, recent BAS and current management accounts | Evidence that the earnings behind the price are real and recent |
| The contract of sale or heads of agreement, with the price split between goodwill, plant and equipment, and stock | Shows what the lender is being asked to fund and which parts can carry their own security |
| The lease: term remaining, options, and the landlord's consent to assign. For a franchise, the franchise agreement and disclosure document | The loan term cannot sensibly outrun your right to trade from the premises or under the brand |
| A valuation of the business, sometimes one the lender commissions | Tests the price against the market, especially where goodwill is a large share |
| Your experience in the industry and, for a franchise, the franchisor's approval | Lenders generally want to see that you can run what you are buying |
| Your contribution and where it comes from, with a statement of assets and liabilities | The lender's share is sized around yours |
| A business plan and cash-flow forecast for the first year under new ownership, usually accountant-prepared | Serviceability under the new owner, not the old one |
| Identification for the directors, the ABN or ACN of the buying entity, and credit files for the business and its directors | Standard identity and credit checks |
| Details of any vendor finance | Treated as debt; must be disclosed |
GST on the sale, any duty on business assets and the structure of the buying entity are matters for your accountant and solicitor, and that advice belongs before the contract is signed.
How the finance runs alongside the purchase
- Before the offer: a conversation about what the target's earnings, your security and your contribution could plausibly support, as a planning view, so you do not negotiate a price the finance cannot follow.
- Heads of agreement: once the price and the main terms are agreed in principle, the broker starts assembling the file while your solicitor and accountant begin their work.
- Contract subject to finance: your solicitor sets the finance condition and its date, and the application goes to the lender whose appetite fits the deal.
- Due diligence and assessment together: your due diligence (financials, lease, staff, suppliers) and the lender's assessment (valuation, lease assignment, franchisor approval) run in parallel because they read the same documents.
- Conditional approval: if the lender is willing to proceed, its offer typically arrives with conditions, and the broker works through them with you before your solicitor is told the finance condition is satisfied.
- Unconditional: with finance and the other conditions satisfied, the contract becomes unconditional and the settlement date is fixed.
- Settlement and drawdown: the facility is drawn on settlement day, the funds pass to the seller through the solicitors, stock is adjusted at valuation and you take over the business.
One structural point to raise with your solicitor early: lenders generally prefer to fund a purchase of the business and its assets rather than a purchase of the company's shares, because the old company's liabilities come with the shares.
When the finance should not be arranged
Sometimes the right answer from a broker is not to arrange the finance. The clearest cases: when the price is not supported by earnings that can be verified from tax returns and BAS, because a lender will not fund a story; when the lease or the franchise agreement has less time to run than any sensible loan term, because the right to trade would expire before the debt did; when your contribution would use every dollar you have and leave nothing for the first quarter's wages, stock and rent; and when what you are really doing is starting a business rather than buying one, which lenders treat differently, covered in our guide to startup business loans with under 12 months trading. Hearing that early costs you a conversation. Hearing it after the contract is signed costs a great deal more.
Buying or selling a business in the Northern Rivers
Our office is in Byron Bay, and business sales across the Northern Rivers bring buyers to us for the finance side of the deal, and sellers whose buyer needs finance to settle. To be clear: we are a finance broker, not a business broker. We do not list businesses for sale or find buyers; we arrange the finance once a buyer and a business have found each other. See business finance in Byron Bay and business finance across the Northern Rivers for how we work locally.
Industries
Industries we help fund
Whatever you do, the finance that fits depends on how your business actually trades. These are some of the industries we arrange funding for, each with its own guide.
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Agriculture & farming
Machinery, utes, inputs bought a season ahead, and repayments that can follow the harvest.
Agriculture finance -
Hospitality & cafés
Fit-outs, commercial kitchen gear, stock before the rush, and the quiet months in between.
Hospitality finance -
Retail & e-commerce
Buying stock before the season sells, fit-outs, and bridging supplier terms against your sales.
Retail finance -
Trades & construction
Tools, vehicles, materials up front, and bridging the gap between doing the work and being paid.
Trades & construction finance -
Health & allied health
Practice fit-outs, clinical equipment, hiring, and opening a second set of rooms.
Health finance -
Professional services
Hiring ahead of billings, office and technology, and bridging project-based invoicing.
Professional services finance -
Transport & logistics
Trucks and trailers, running costs, and carrying the gap between delivery and payment.
Transport & logistics finance
Customer stories
What business owners say about 121 Brokers
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5 out of 5
Cash flow in retail is lumpy, so a line of credit made far more sense for me than a lump-sum loan. I draw down when stock orders are due and pay it back after the season sells through. Having that buffer sitting there has taken so much stress out of running the shop. Only wish I'd set it up years ago.
Priya S. Retail store owner, Sydney NSW -
5 out of 5
My biggest client pays on 60-day terms and it was slowly strangling my payroll. Invoice factoring let me get most of the money up front instead of waiting two months. Now I can pay my contractors on time and take on bigger projects without sweating the gap. It changed how I run the business.
Sophie L. Marketing agency founder, Melbourne VIC -
4 out of 5
A merchant cash advance worked well for me because repayments flex with my daily card takings. Quiet week, I pay less; busy week, I pay more. It suited the ups and downs of a restaurant far better than a fixed loan. Would have given five stars if the initial paperwork had been slightly quicker, but no real complaints.
Ahmed R. Restaurant owner, Perth WA
Testimonials reflect individual customers' experiences. Outcomes vary and depend on the lender and your circumstances.
121 Brokers Pty Ltd (ABN 37 674 323 712) is a finance broker, not a lender. We arrange finance through third-party lenders. Approval, interest rates, fees, timing and the funds themselves are set and provided by the lender, not by 121 Brokers.
FAQs
Business acquisition finance questions, answered straight
Can I get a loan to buy an existing business in Australia?
A loan to buy an existing business is available from business-purpose lenders in Australia, usually as a mix of property or business security, asset finance, and a contribution from you. The lender assesses the business being bought as closely as it assesses you. 121 Brokers is a finance broker, not a lender: we compare the panel and the lender decides.
How much deposit do I need to buy a business?
The deposit needed to buy a business has no fixed figure. Lenders typically look for a meaningful contribution, and the size varies with the sector, the security offered and the quality of the target's financials. Property security generally lowers the cash required. A broker can tell you what the panel commonly expects for your file before you make an offer.
Can I buy a business with no deposit?
Buying a business with no deposit is generally not possible on the strength of the business lending alone. Where it happens, it is because other security, usually equity in property, covers the lender's position. The property then carries the risk if the business fails, so treat a no-deposit structure as a decision about your home, not just about the purchase.
Will a lender lend against goodwill?
Lending against goodwill is offered by some lenders for part of the price, mostly where earnings are verifiable and the sector has a lending track record, such as professional practices and franchise systems they know. It commonly sits alongside security over the business, a personal guarantee and a buyer contribution. Lenders generally do not fund the whole price this way.
Can I use equity in my home to buy a business?
Equity in your home can be used as security for a business-purpose loan to buy a business. The risk is direct: if the business fails, the lender can look to the home. The rules that protect a home loan borrower do not all apply to business-purpose lending. Talk to a broker and a solicitor first.
What is vendor finance and will a lender accept it?
Vendor finance is where the seller leaves part of the price in as a loan the buyer repays over time, documented in the sale contract. Lenders commonly accept it, expect it to be disclosed, count it as debt in serviceability and usually require it to rank behind their own loan. Get legal and accounting advice before agreeing to it.
Can I get finance to buy a franchise?
Finance to buy a franchise is available from business-purpose lenders. Some lenders have accredited franchise systems and apply a defined process to them; a non-accredited system is assessed like any other business purchase. Lenders typically tie the loan term to the franchise agreement and lease and want the franchisor's approval of you. Franchisor-offered finance is compared like any other option.
When should I arrange finance if I am buying a business?
Finance for a business purchase should be arranged in three stages: an indicative conversation before you make an offer, to see what the earnings and your contribution could support; a contract made subject to finance by your solicitor; and the lender's assessment running alongside your due diligence. Leaving finance until after the contract is signed removes your room to move.
Talk through the purchase before you make the offer
Bring the figures you have (the asking price, the business's recent financials, your contribution and any property you could offer) and we will tell you how the panel is likely to read the file, what it will ask for and what the earnings and your contribution could plausibly support, as a planning view. A conversation, not an application.