How to Get a Bank Loan to Buy a Business in Australia

Yes, you can get a bank loan to buy an existing business in Australia. Australian banks will lend against established businesses with demonstrable cash flow — typically 60 to 70 per cent of the purchase price, secured by business assets and a personal guarantee. The catch is that acquisition lending works very differently to a home loan or a startup loan, and most first-time buyers approach the bank the wrong way and waste months.

This guide covers how business acquisition finance actually works, what equity you need, which lenders to approach, and how to package your application so the bank says yes.

How acquisition lending differs from every other bank loan

When you borrow to buy a house, the bank focuses on the asset. If you stop paying, they sell the house. When you borrow to buy a business, the asset picture is messier — a lot of what you're paying for is goodwill, relationships, and the existing team. You can't really sell those at auction.

So banks shift their focus to cash flow. The key number is debt service coverage ratio (DSCR): your EBITDA divided by your annual debt repayments. Most Australian lenders want a DSCR of at least 1.25x, meaning the business needs to generate $1.25 in earnings for every $1 in debt repayments. Some specialist lenders push that to 1.5x.

The rule of thumb: a $400,000 loan at 8% over five years costs roughly $97,000 a year to service. That means you need EBITDA of at least $121,000 to satisfy a 1.25x coverage ratio. If the business earns $100,000, you're borrowing too much.

This calculation matters before you ever walk into a bank.

How much deposit do you need?

Banks will not fund 100 per cent of a business purchase. Goodwill — the premium above net tangible assets you're paying for the brand, the customer base, the staff — is unsecured and therefore partly your risk to carry.

As a general rule, expect to put in 30 to 40 per cent of the purchase price as equity. On a $500,000 business, that's $150,000 to $200,000 of your own cash or assets.

The exact number depends on a few things:

How much property is included. Businesses with freehold premises or significant plant and equipment give the bank something to sell. Lenders will go higher LVR on the tangible asset component.
The industry. Banks are more comfortable with businesses that have physical assets (trades, equipment, vehicles) than those running on relationships and reputation.
The DSCR. If the serviceability is strong, some lenders will stretch further on equity requirements.

A broker I know dealt with a buyer last year who had $120,000 in cash and wanted to buy a $400,000 commercial cleaning business. The P&L was clean, the contracts were transferable, and the owner had been around for 14 years. Two of the big four said the equity was too thin. A specialist lender approved it with the buyer's car and some equipment as additional security. Same deal, different lender, different outcome.

What banks actually look at

The bank's website will tell you they need a business plan and six months of bank statements. That's the starting point. What they're really building is a picture of risk.

Business financials: At minimum, three years of tax returns, P&L statements, and BAS lodgements. They'll reconcile these against each other and against bank statements. If the seller's accountant has been doing EBITDA "adjustments" that don't hold up to scrutiny, the bank will find them. Read the guide to checking financials when buying a business before you submit anything.

Your personal financial position: Balance sheet, income, existing liabilities, superannuation. They're assessing whether you have the capacity to inject more capital if the business hits a rough patch in year one.

Industry risk appetite: Banks have internal risk frameworks that rate industries. Hospitality and retail are hard to finance. Trades, commercial services, and B2B businesses with contracts tend to be easier. If you're buying an HVAC or plumbing business with maintenance agreements, mention the recurring revenue. It changes the risk conversation.

Management: Who will run the business? If the answer is "the same person who runs it now" — i.e., the seller is staying on — banks don't love that. If you're stepping in as the operator or have hired a manager, explain it clearly. The bank wants to know the business doesn't fall apart on day one. (They've seen it happen.)

Which lenders to approach

The big four — ANZ, NAB, CommBank, Westpac — all do business acquisition lending, but their appetite varies by branch, by relationship manager, and by what they've been doing lately with their SME books. The major banks are generally cheaper (7–8.5% p.a. for secured acquisition loans in 2026) but slower and more conservative.

Specialist lenders — ScotPac, Moula, Liberty Business, and others — will move faster and take more risk, but you'll pay for it in rate and fees. Rates in the 9–12% range aren't unusual for non-bank lenders.

Finance brokers who specialise in business acquisitions are worth using here. A good one knows which bank has appetite for your deal type right now, which RM at NAB actually does these deals versus which one just says they do, and how to present your application to minimise the back-and-forth. Their fee is usually built into the loan structure or charged separately at 0.5–1% of the loan amount. On a $300,000 loan, that's $1,500–$3,000 — a reasonable price to cut weeks off the process and increase your approval odds.

How to package your application

Banks deal in information asymmetry. The more you reduce their uncertainty, the faster and easier the approval process is. Most business buyers show up with the vendor's financials and a hope. You want to show up with a deal package.

What a good acquisition loan application includes:

Three years of vendor financials (tax returns, P&L, BAS)
Your normalised EBITDA calculation — explain the addbacks clearly with documentation
The purchase price and deal structure — asset vs share sale, any earn-out components, working capital treatment
Your equity position — where the cash is coming from (savings, equity release, super, etc.)
Your personal financial statement — assets, liabilities, income
A one-page business summary — history, what you're buying, why it makes sense, what you'll do differently
The signed heads of agreement or LOI — banks want to see you have a real deal, not a hypothetical

The signed LOI matters more than people realise. A bank will rarely go deep on a credit assessment without one. Don't start the formal application before you have terms agreed with the seller.

Want the full checklist? Grab the Bank Lending Criteria Checklist free — it covers every document the bank will want and how to present your EBITDA calculation.

When bank finance isn't enough on its own

Banks will often fund less than you need, or fund it at terms that make the deal marginal. That's where creative deal structure comes in.

The most common complement to bank debt is vendor finance — where the seller takes back a second loan from the proceeds. A deal might look like: 30% cash equity, 50% bank debt, 20% vendor finance over three years. The bank gets first security, the seller gets deferred proceeds, and you get across the line without needing to fund the full 30-40% equity requirement in cash.

Earn-outs serve a similar purpose when there's a valuation gap — the seller agrees that part of the purchase price is contingent on performance in the first one or two years. This doesn't reduce your day-one equity requirement, but it can reduce the total amount you need to borrow.

Banks are generally comfortable with vendor finance in the capital stack, provided the vendor loan is clearly subordinated (they get paid after the bank). Get your lawyer to document this cleanly.

This is covered in depth in Module 6 of the Playbook, which walks through every deal structure option and when each one applies.

FAQ

Can I get a loan to buy a business in Australia? Yes. Australian banks and specialist lenders routinely fund business acquisitions. You'll need 30–40% equity, at least three years of business financials, and the business needs to generate enough cash flow to service the debt at 1.25x coverage.

How much deposit do I need for a business loan in Australia? Typically 30 to 40 per cent of the purchase price. On a $500,000 acquisition, expect to have $150,000–$200,000 in cash or assets. Higher if the business has significant goodwill and limited physical assets.

Can I use a personal loan to buy a business? You can, but personal loan rates are higher (often 12–18%) and terms are shorter. For any purchase above $50,000–$100,000, a commercial acquisition loan will be cheaper. Many buyers use a small personal loan to cover due diligence and legal costs while waiting for commercial approval.

What is the 1% rule in business? Not a standard term in Australian business acquisition. In property, it means monthly rent should be 1% of purchase price — a rule that hasn't applied to Australian property for 20 years. In business, lenders care about DSCR and EBITDA multiples, not a 1% rule.

What salary do I need for a $500,000 business loan? Banks focus on the business's cash flow more than your personal salary for acquisition lending. The business needs EBITDA of roughly $125,000–$150,000 to service a $500,000 loan at standard terms. Your personal income matters for the guarantee assessment, not the primary serviceability calculation.

Where to from here

Getting bank finance for a business acquisition is genuinely achievable — but it rewards preparation. The buyers who get approvals quickly are the ones who show up with clean deal packages, not the ones who walk in hoping the bank will figure it out.

Start by downloading the Bank Lending Criteria Checklist, then read through the general financing options overview for context on how bank debt fits alongside vendor finance and equity.

And if you want a broader view of how deal structure affects your outcome, subscribe to The Leveraged Worker — a weekly newsletter on buying and running blue-collar businesses in Australia. The deal structure module comes up every few weeks with real examples.