Buyer Guide
If you've spent any time in US business acquisition communities you've heard about the SBA loan — the government-backed loan that lets Americans buy a $2M business with 10% down. It didn't make it to Australia. There is no equivalent here. And yet thousands of Australians buy businesses every year. Here are the real financing options available to buyers in the $500K–$5M range: what works, what doesn't, and what no one tells you upfront.
Cash is the most popular form of finance for business acquisitions in the $100K–$1M range. This doesn't mean every buyer rocks up with a briefcase full of hundreds — it means some combination of savings, equity release from property, and liquid assets. The average Australian buyer is funding a significant chunk of the deal from their own resources.
Why? Because the other options are harder to access than most people expect. Banks are cautious. The business you want to buy has risks that don't fit neatly into a lending matrix. And unlike buying a house, there's no standardised product designed for this exact purpose.
The practical implication: if you're looking at businesses in the $500K–$1.5M range, expect to need at least 40–50% of the purchase price in cash or cash-equivalent. That's not a rule — it's a pattern that repeats consistently.
Australian banks will lend for business acquisitions. But the experience is nothing like getting a home loan.
What banks want to see
What banks typically offer
What kills most applications: The goodwill component. If you're buying a services business for $1.2M and $900K of that is goodwill, the bank sees $900K of thin air. They'll lend against the equipment, the vehicles, maybe the debtors — but goodwill is the thing you're paying the most for and the thing the bank is least interested in funding.
The major banks (CBA, NAB, Westpac, ANZ) all have business lending divisions, but their appetite varies enormously by industry, geography, and whoever happens to be your banker. Smaller lenders and non-bank financiers like Prospa, Moula, and OnDeck are faster but more expensive.
The insider move: Talk to a business lending broker — not your home loan broker, they're different worlds. A good broker knows which lenders are actively writing business acquisition loans in your industry and price range, saving you months of dead-end conversations.
Vendor finance — where the seller agrees to fund part of the purchase price — is far more common in Australian business sales than most first-time buyers realise.
How it typically works
It gets the deal done. If you need $1.2M and the bank will only lend $600K and you have $400K in cash, the deal dies without vendor finance. The seller who says "I'll carry $200K over 24 months" gets to sell their business instead of watching it sit on the market.
They earn interest. A seller carrying $200K at 6% for two years earns an extra $12K–$24K on top of the sale price.
It signals confidence. A seller willing to leave money in the business is telling you they believe it will keep performing. If the seller won't consider any vendor finance at all, that's worth paying attention to.
Don't ask "will you do vendor finance?" — that sounds like you can't afford the business. Instead, frame it as a deal structure: "I'd like to propose a structure where we settle 65% at completion and the balance over 24 months at market rates. This keeps our interests aligned through the transition period."
The "aligned interests" framing matters. If the seller has money riding on your success, they're more likely to help with the handover, introduce you to key customers, and return your calls in month three.
Important: Get a lawyer who knows vendor finance. You need a proper loan agreement, PPSR registration, director guarantees if buying through a company, and clear default provisions. Make sure they've done it before.
Sometimes buyer and seller disagree on what the business is worth. The seller says "$1.5M because I had a great year." You say "$1M because last year was an outlier." An earnout bridges that gap.
An earnout means part of the purchase price is contingent on the business hitting agreed targets after settlement. For example: $1M at settlement, plus $250K if revenue stays above $800K in year one, plus $250K if revenue exceeds $900K in year two.
This is different from vendor finance, which is a fixed amount owed regardless of performance. An earnout only pays out if the business performs.
When earnouts work well
When they go wrong
Earnouts are useful but need careful drafting. Budget $5K–$10K in legal fees to get the earnout agreement right. Cheap documentation on an earnout is a false economy.
Every second aspiring buyer asks: "Can I use my super to buy a business?" The short answer is: probably not in the way you're imagining.
What you cannot do
What you can do
The commercial property angle is the most practical. If the business includes a freehold property — or if you can negotiate a lease assignment and then have your SMSF purchase the property — you can effectively redirect super into supporting the acquisition. The rules are complex, the ATO watches closely, and you need specialist SMSF advice (not your regular accountant).
Cost of getting it wrong: The ATO can make the entire SMSF non-compliant, which means tax at the top marginal rate on everything in the fund. This is not a DIY project.
This model is growing fast in Australia, particularly in the $1M–$5M deal range. A lead acquirer identifies and manages the deal while a group of investors co-invest alongside them. You put in 10–30% of the equity, investors fund the rest, and you earn a management fee plus a share of the upside. Think of it as a mini private equity fund built deal by deal.
What makes this work
What makes this hard
This model isn't for everyone, but if you have deal skills and limited capital, it's worth understanding.
Almost no deal in the $500K–$5M range is funded from a single source. Here's what a typical structure looks like:
| Source | Amount | % of deal |
|---|---|---|
| Buyer's cash (savings + equity release) | $400K | 33% |
| Bank loan (secured against equipment + vehicles) | $450K | 38% |
| Vendor finance (24 months, 6% interest) | $250K | 21% |
| Working capital reserve (buyer's cash) | $100K | 8% |
| Total | $1.2M | 100% |
Notice the working capital line. This is the one first-time buyers forget. You don't just need money to buy the business — you need money to run it while you find your feet. Payroll doesn't wait. Suppliers don't wait. The ATO certainly doesn't wait.
Budget at least 2–3 months of operating expenses as a working capital buffer on top of the purchase price. If the business does $100K/month in expenses, that's $200K–$300K you need available that isn't part of the acquisition price.
Know your number. Before you look at a single listing, understand how much you can actually deploy — cash, borrowing capacity, and investor appetite. Talk to a business lending broker (not a home loan broker) and your accountant.
Structure the deal around financing from day one. Don't fall in love with a business and then figure out how to pay for it. The financing structure should inform your offer, not the other way around.
Always ask about vendor finance. It costs nothing to propose it, and it tells you something about the seller's confidence in the business.
Budget for the transition, not just the purchase. Working capital, your own living expenses during the handover period, advisory fees — these add 15–25% on top of the purchase price.
Get the right advisors early. A business acquisition accountant, a commercial lawyer who's done business sales (not your family's property conveyancer), and ideally someone who's actually bought a business before.
The financing landscape in Australia isn't as clean as one government-backed loan product. But it's navigable — and the creativity required often leads to better deal structures than a one-size-fits-all loan ever could.
ThatDeal provides intelligence on Australian business acquisitions. We make the broker calls so you don't have to.
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