Compare Loans To Buy a Business in Australia
Lend can help you get the best finance option for your next venture. It’s free to compare, with no credit score impact.
How Lend can help you finance a business purchase
Huge choice of lenders
We know which lenders specialise in business purchase finance and who will offer you the best deal.
Secured vs unsecured loans
Secured business loan
A secured business loan is the cheapest option for business acquisition finance. It generally involves using residential property as collateral for the loan in exchange for lower interest rates. Secured loans have longer terms of up to seven years.
A secured business loan is the cheapest option for business acquisition finance. It generally involves using residential property as collateral for the loan in exchange for lower interest rates. Secured loans have longer terms of up to seven years.
It can be a relatively easy way to increase your borrowing capacity, but it means your house is on the line if your business fails. It’s definitely not a decision you should make lightly, so be sure to discuss your options with your financial advisor.
Alternatively you may be able to use a business asset as security – either one owned by your current business or an asset owned by the business you’re acquiring. But generally, business lenders prefer residential assets as security.
Unsecured business loan
If you don’t have property you can (or want to) use as collateral, you may be able to get an unsecured business loan to help you get the funds to buy a business, but interest rates are generally higher since there’s no security on the loan.
If you don’t have property you can (or want to) use as collateral, you may be able to get an unsecured business loan to help you get the funds to buy a business, but interest rates are generally higher since there’s no security on the loan.
Unsecured business loans tend to be a short-term financing option, so you may only be able to borrow a portion of the purchase price with a loan term of up to three years.
If you already have some capital, an unsecured loan could be enough to bump your funds to what you need to acquire the business, or to boost your working capital during the takeover period.
How to qualify for a loan to buy a business
Minimum eligibility requirements
- Australian citizenship or permanent residency
- An active ABN or ACN
- Sufficient regular revenue to repay the loan in full
- The ability to provide business bank statements and other financials (both for your current business and the one you’re buying
- Some lenders may require security
- A good credit score — the minimum credit score for business lending is around 400
Pros & cons of buying an existing business with a loan
Pros
• Easier to get finance
Lenders are generally more willing to fund a business purchase than a startup.
• Secured loan options
You may be able to use business assets or equipment as security to lower your interest rate.
• Proven revenue helps
An established business with stable income makes it easier to demonstrate loan serviceability.
Cons
• High financial risk
Taking on debt to buy a business can put your personal finances on the line.
• Costly due diligence
You'll need to invest time and money into legal, financial, and operational checks.
• Hidden problems
Even thorough due diligence might miss issues that emerge after the purchase.
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