Non-Bank Lenders for Business Acquisition in Australia: A Buyer's Guide

A non-bank lender is any financial institution that provides business acquisition loans without holding a banking licence. In Australia, they include specialist lenders like Scotpac, Liberty Financial, Lumi, Prospa, Moula, and a range of private credit funds. They operate under Australian Credit Licence conditions and are regulated by ASIC — but they don't carry deposits, which changes how they price risk.

For anyone buying a trades business, a service business, or a blue-collar operation in the $300,000 to $3 million range, non-bank lenders are worth understanding. Not as a fallback when the banks say no — though that's useful too — but as a genuine alternative that sometimes gets you a better outcome. This is covered in Module 6 of the Playbook.

How non-bank lenders differ from the big four banks

The big four (CBA, ANZ, NAB, Westpac) dominate business acquisition lending in Australia, but they move slowly and price their products for borrowers who fit a narrow mould. If your deal doesn't match their scorecard — not enough tangible assets, too much goodwill, acquisition of a service business without property — you'll often get a flat no.

Non-bank lenders take a different approach. They underwrite on cash flow rather than assets. They look at what the business generates — its EBITDA, its recurring revenue, its contract base — rather than what you could liquidate if it went wrong. That's a more sensible way to assess a service business, but it comes with a different cost structure.

The other practical difference is speed. A bank approval can take eight to twelve weeks. A non-bank lender who specialises in business acquisitions can often get you to conditional approval in two to three weeks, and to settlement within a month of receiving your full information pack. For sellers who want certainty quickly, that matters.

Types of non-bank finance for buying a business in Australia

Non-bank financing for business acquisitions in Australia takes several forms.

Term acquisition loans are the most common. These work like a bank loan — you borrow a lump sum, repay it over three to seven years with fixed or variable interest. The difference is that non-bank term loans for acquisitions typically go to 70-80% of the purchase price (versus 50-60% from a bank for a goodwill-heavy deal), with shorter maximum terms and higher rates. Liberty Financial and Finexia both write these.

Specialist acquisition finance from firms like Scotpac and Gavin Maan & Co focuses specifically on business purchases. They've done hundreds of acquisition deals and understand the documentation — information memoranda, adjusted EBITDA, vendor finance positions, earn-outs. A general business lender hasn't. That context matters when you're trying to get an unusual deal across the line.

Private credit is the less visible end of this market. Private credit funds lend against cash flow at higher rates than banks or mainstream non-banks, but with more flexibility on structure. If you're buying a business with concentrated revenue, or a management buy-in where you don't have three years of personal tax returns showing the income, private credit can work where nothing else will.

Mezzanine finance sits between senior debt and equity — it takes a higher rate and sometimes a small equity component in exchange for funding a portion of the deal the senior lender won't touch. It's more common in larger acquisitions but worth knowing about if your deposit is thin. A broker who specialises in business acquisition finance can usually find a mezzanine partner if the deal is strong enough.

The question of how much deposit you need matters here — non-bank lenders will generally want to see at least 20-30% equity in the deal from you, which can come from cash, home equity, or vendor finance.

Main non-bank lenders for business acquisitions in Australia

A short field guide to who's actually operating in this space:

Scotpac — one of Australia's largest non-bank business lenders. Originally trade finance and debtor finance, they've expanded into acquisition loans. Strong at deals with debtors or recurring billings as security.

Liberty Financial — broad non-bank lender with a business division. Useful for buyers who have home equity and want to cross-secure with a property component, but aren't meeting standard bank serviceability tests.

Lumi and Prospa — both fintech lenders better suited to working capital than acquisition finance. Their loan sizes cap out under $500K and their terms run short (under three years), which makes them a mismatch for most business acquisitions. Worth knowing about for post-acquisition working capital, not the purchase itself.

Moula — similar profile to Lumi. Good for cash-flow lending to an operating business, less useful for acquisition finance.

Finexia — specialist in business purchase finance. They write acquisition loans explicitly and have structured deals for buyers who couldn't get bank approval. Worth a conversation if you've been knocked back.

Gavin Maan & Co — boutique acquisition finance broker with its own book. They focus specifically on business purchases and can access a panel of funders.

Private credit funds — these don't advertise publicly. Access is through specialist finance brokers who work in acquisitions. If your deal is over $1M and has a genuine cash flow case, it's worth asking a broker whether private credit is appropriate.

(I spoke to a broker last month who placed a $1.4M acquisition through a private credit fund because the business was a sole-operator pest control company — strong EBITDA, long-standing contracts, but a one-person operation the bank wouldn't touch. Private credit got it done at a rate that was expensive but still made the deal stack up.)

When to use a non-bank lender vs a bank

Use a bank first if your deal qualifies. Bank rates for business acquisition finance in Australia sit in the 7-9% range (as at late 2026); non-bank rates start at 9-10% for the most competitive products and can run to 15-18% for private credit. That cost difference, compounded over five years on a seven-figure loan, is material.

But use a non-bank lender when:

The deal has high goodwill content relative to physical assets and the bank won't fund it
You're a first-time buyer without an existing relationship with the bank
Your personal tax returns don't show the income you'll need to service the loan (a common issue for corporate employees moving into business ownership)
Speed matters — the seller has other buyers, or conditional finance is holding up settlement
The structure is unusual (vendor finance component, earn-out, related-party elements) and the bank won't engage

A hybrid approach also works. Some buyers use a bank loan for the asset-backed component and a non-bank or vendor finance arrangement for the goodwill portion. This is more complex to settle but can reduce the blended cost of capital below what a full non-bank deal would charge. Check your financing options for buying a small business before ruling out combinations.

What non-bank lenders look at: approval criteria

Non-bank acquisition lenders in Australia assess five things:

Business cash flow — specifically, normalised EBITDA over the past two to three years. They'll want your tax returns, your profit and loss statements, and your add-backs schedule. They'll also want the current owner's PAYG summary or drawings history to understand what the business actually pays out.

Deal serviceability — can the business service the debt from its current earnings? A non-bank lender will typically want to see 1.3x to 1.5x DSCR (debt service coverage ratio). That means if your loan repayments are $150,000 per year, they want the business generating at least $195,000-225,000 in annual cash flow before debt service.

Your personal position — they'll want your personal tax returns, an asset and liability statement, and evidence of your equity contribution. A personal guarantee is standard.

The deal structure — vendor finance in the deal is usually viewed positively (it means the seller has skin in the game). An earn-out that defers part of the purchase price also helps serviceability in year one. Read more about earn-out arrangements if that's part of your structure.

Your experience — banks almost never ask about this; non-bank lenders often do. If you're buying a trades business and you've managed operations before, say so. If you're bringing in a general manager, have that person's CV ready.

How to present to a non-bank lender as a first-time buyer

The most common mistake buyers make is treating a non-bank lender like a bank — submitting a loan application form and waiting. Non-bank lenders in this space are relationship-driven. The better approach is to present the deal proactively.

A solid first-time buyer submission should include: the information memorandum, two to three years of the business's financial statements, your adjusted EBITDA workings (showing your add-backs clearly), a one-page memo on why you're buying this business and what your plan is, and your personal financial position.

That last bit — the one-page investment rationale — makes a meaningful difference. It tells the lender you've done the work. The numbers speak for themselves; the rationale tells them you understand the business. (The seller had done his own numbers before approaching us, which is more than most buyers can say about their sellers.)

For a detailed lender-specific checklist, grab the free Bank Lending Criteria Checklist — it covers what both bank and non-bank lenders typically want to see.

What it costs: rates, fees, and terms

Non-bank business acquisition loans in Australia carry higher costs than bank finance. As a rough guide for late 2026:

Mainstream non-bank term loans: 9-12% interest rate, 1-2% establishment fee, three to five year term
Specialist acquisition finance: 10-14%, with fees ranging from 1-3% of the loan amount
Private credit: 12-18%, potentially with an equity kicker on larger deals, two to four year term

The establishment fee is often negotiable, particularly through a specialist broker. If you're going through a broker, ask about their commission structure — most are paid by the lender, but it's worth knowing.

Beyond the headline rate, watch for prepayment penalties (some non-bank lenders charge a break fee if you refinance into a cheaper product once the business is established), annual review fees, and ongoing monitoring requirements.

The Financing Options Checklist includes a cost comparison framework across different funding sources.

Questions to ask a non-bank lender before committing

Before signing any loan documents, ask:

What is the all-in cost of this loan including establishment fees, ongoing fees, and break costs?
Is the interest rate fixed or variable, and under what conditions can you move the rate?
What triggers a default? (Some non-bank loans have financial covenants that banks don't — like minimum cash balance requirements or restrictions on drawings.)
Can I refinance into a lower-rate bank product once I have 12-24 months of trading history?
Is this loan secured against the business only, or does it require a charge over my personal assets?

That last question matters more than most buyers realise. Some non-bank acquisition loans are registered as a personal guarantee plus a PPSR charge over the business; others require a mortgage over your family home. Understand what you're putting at risk before you sign.

Combining non-bank and bank finance in the same deal

One approach experienced buyers use: get the bank to fund the property or equipment component of an acquisition (where they're comfortable lending at 70-80% LVR against tangible assets) and use a non-bank lender for the goodwill component, with vendor finance picking up any remaining gap.

This requires your lawyer to manage a more complex security arrangement at settlement — the bank and non-bank lender both need to be comfortable with each other's security positions. It's doable, but it adds time and legal cost.

The upside: the blended interest rate can be meaningfully lower than if you funded the whole deal through a non-bank at 12-13%. If the deal is worth doing, it's worth spending an extra two weeks on financing structure.

For the full framework on deal financing, including a side-by-side comparison of bank, non-bank, vendor finance, and equity partner structures, see Module 6 of the Playbook.

FAQ

What is a non-bank lender in Australia? A non-bank lender holds an Australian Credit Licence but does not hold a banking licence or take deposits. They fund lending from institutional capital or their own balance sheet. For business acquisition loans, the main non-bank lenders include Scotpac, Liberty Financial, Finexia, and private credit funds.

Can I get a non-bank loan to buy a small business in Australia? Yes. Non-bank lenders in Australia write business acquisition loans from around $100,000 upward. They focus on the cash flow of the business being acquired rather than the physical assets, which makes them useful for service businesses and trades businesses with high goodwill content.

How much can I borrow from a non-bank lender to buy a business? Most non-bank acquisition lenders will lend up to 70-80% of the purchase price, subject to the business having sufficient EBITDA to service the debt at a 1.3-1.5x coverage ratio. For a $500,000 acquisition, expect to contribute $100,000-150,000 of your own equity, which can include vendor finance.

Are non-bank business acquisition loans more expensive than bank loans? Yes. Non-bank rates typically run 2-6% higher than bank rates for equivalent loan sizes. For most buyers, this means the interest cost matters — build it into your acquisition model before you commit.

Can I refinance a non-bank acquisition loan into a bank product later? Often yes. Once you have 12-24 months of trading history as the new owner, a bank will re-assess the deal against your actual performance. If the business has traded as expected, you can often refinance into lower-cost bank debt. Check the break fee terms in your non-bank loan before assuming this option is open.

If you're working through your financing options, the bank loan process for buying a business is a good companion read — it covers what the banks are looking for and why they decline some deals, which helps you understand when a non-bank lender is the right call.

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