You found the right business, the numbers work, and you don't have the full purchase price sitting in an account. Here's how Australians actually fund acquisitions and startups, and the trade-offs nobody mentions until after they've signed.
You found the right business. The numbers work. The seller is motivated. You can already picture yourself running it. There's just one problem: you don't have $600,000 sitting in a bank account, and you're pretty sure the bank won't hand it over on a handshake.
Most people get the money question wrong at this exact moment, treating it as binary: either you have it or you don't, either the bank says yes or they laugh you out. Neither is true, and that misunderstanding kills more deals than bad due diligence ever will.
Most business acquisitions in Australia are funded with a combination of sources: some of your money, some of the bank's, sometimes some of the seller's. The buyer who turns up with 100% cash is the exception, not the rule. Startups are harder to fund through traditional lending, but there are still more options than most people realise.
The real challenge isn't finding money. It's knowing which type of money suits your situation, what it actually costs, and what you're putting at risk to get it.
Buying is easier to fund than starting, because the business already has revenue, customers, staff and a track record. Lenders can see what they're backing.
You use property, usually your home, as security. This is the cheapest option in terms of interest rates, typically 6% to 9% p.a., and you can borrow a higher percentage of the purchase price. If the business fails and you can't repay, the lender can sell your home. Best for buyers with plenty of home equity and strong confidence in the business, backed by thorough due diligence.
A lump sum based on the cash flow of the business being purchased, without property as security. Rates are higher, typically 9% to 20% p.a., but your home isn't on the line in the same way. Most lenders still require a personal guarantee from directors, so don't confuse unsecured with risk-free. Typical amounts $5,000 to $500,000, terms of 1 to 5 years.
The seller funds part of the purchase price. You pay a deposit at settlement (commonly 30% to 50%), then repay the balance over 1 to 3 years with interest. Sellers do this because it can help them sell faster, at a higher price, or to a buyer without 100% cash ready, and it signals their confidence in the business. The seller usually takes a security interest over the business assets, registered on the PPSR, until the balance is paid.
Not a loan, but a structure worth understanding. Part of the purchase price is deferred and tied to the business's future performance after you take over, for example paying $400,000 upfront and a further $100,000 if the business hits an agreed revenue or profit target within 12 months. This reduces your upfront cash requirement and shifts some risk to the seller, but adds complexity around how performance is measured and who controls the books. Get a lawyer involved.
In practice, most acquisitions use a combination: roughly 20% to 30% from the buyer's own savings, 40% to 50% from a bank loan, and 20% to 30% from vendor finance or an earnout. This spreads the risk and makes acquisitions achievable for buyers who don't have the full purchase price in the bank. If your broker isn't discussing a blended approach, ask why, because single-source funding is almost always more expensive, more risky, or both.
Figures are indicative and depend on the lender, the business, and your financial profile.
| Option | Best for | Typical cost | Security |
|---|---|---|---|
| Secured Loan | Buyers with home equity and strong confidence in the business | 6% to 9% p.a. | Property, usually your home |
| Unsecured Loan | Buyers without property to offer, purchasing a business with strong cash flow | 9% to 20% p.a., $5,000 to $500,000 | No property, but usually a personal guarantee |
| Vendor Finance | Deals where the seller is motivated and there's a funding gap to bridge | 30-50% deposit, 7% to 15% p.a. on the balance | Security interest over business assets (PPSR) |
| Earnout | Deals with uncertainty about future performance, seller staying involved | Highly negotiable, tied to performance metrics | Defined in the sale agreement |
Starting from scratch is harder to fund than buying. There's no revenue history, no customer base, no track record, so lenders are backing you and your plan rather than an existing business.
Most startups in Australia are initially self-funded through savings, a mortgage redraw, or a home equity line of credit. The upside is no interest to a third party and no personal guarantees to sign. The downside is that your personal financial risk is concentrated, with no one else absorbing the loss if it doesn't work.
Some lenders, particularly fintechs and specialist lenders, offer loans to businesses with less than 12 months of trading history, typically $5,000 to $500,000 at rates from 8.99% to 25% p.a. Expect to provide a detailed business plan, cash flow projections, evidence of industry experience, and a personal guarantee. Best for founders with strong personal credit and a clear plan for how the funds will be used.
The total repayable amount in dollars, not the rate and not the monthly figure. Compare that total to what you're getting before you decide.
Ask whether you can restructure repayments, whether there's a grace period, and what triggers a default. Know the worst case before you sign, not after.
Property, personal guarantee, business assets - understand exactly what's at risk. Unsecured doesn't mean nothing is at risk, since most lenders still require a personal guarantee from directors.
Check whether the seller's security interest is registered on the PPSR, whether any earnout metrics are clearly defined, and what happens if you disagree. Get legal advice, since this is where deals unravel.
Work out what happens if revenue is 30% lower than projected in year one. If you can't still make repayments and cover living costs, you need a different structure or a smaller loan.
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Schedule a callThis guide is general information only and does not constitute financial advice. Always consult your accountant, financial adviser and solicitor before making decisions about business acquisition finance. Thriver Finance Pty Ltd, Australian Credit Licence 389087.