Financing Options Checklist: Buying a Business in Australia

Business Acquisition Financing Options Checklist

Instructions: Work through each section for the specific deal you're assessing. Fill in the figures where prompted. The goal is to identify which financing sources are available to you and build a stack that reaches the purchase price.

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Section 1: Your Personal Equity Position

Before approaching any external lender or seller, understand exactly what you're bringing to the table.

• Calculate your liquid personal assets — cash savings, term deposits, share portfolio (at current market value, not cost base)

  • Amount available for acquisition equity: $__________
  • Note: Keep 3–6 months of living expenses separate; don't commit those to the deal

• Calculate available home equity — current property value minus outstanding mortgage(s) minus a 10–20% buffer

  • Estimated available equity: $__________
  • Have you spoken to your mortgage broker about releasing this equity? Yes / No
  • See using home equity to buy a business for the mechanics

• Check other realisable assets — investment properties, vehicles, business interests, family trusts

  • Additional equity available: $__________

• Total personal equity available: $__________

• Comfort-test your equity — ask yourself: if this business performed at 70% of projected earnings for 12 months, could you service debt and still live comfortably? If no, your equity position is too thin

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Section 2: Bank Lending Assessment

Banks typically lend 50–70% of the business purchase price, secured against business assets or personal property. This is your largest potential funding source.

• Identify eligible lenders — major banks (ANZ, CBA, NAB, Westpac), regional banks (Bank of Queensland, Bendigo), non-bank lenders (Scotpac, Moula, OnDeck)

  • Primary lender to approach: __________
  • Backup lenders: __________

• Assess the business's debt serviceability — banks use DSCR (debt service coverage ratio). Divide the business's normalised EBITDA by the estimated annual debt repayment

  • Normalised EBITDA: $__________
  • Estimated annual loan repayment (interest + principal): $__________
  • DSCR = EBITDA ÷ debt repayment: __________ (banks want 1.2x minimum, prefer 1.5x+)

• Confirm your personal credit position — obtain your Equifax credit report before the bank does; check for defaults, adverse listings, or high credit utilisation

  • Personal credit score: __________
  • Any adverse listings to resolve? Yes / No

• Assess security position — what are you offering as security?

  • Business assets (equipment, plant, vehicles, debtors)
  • Residential property
  • Commercial property
  • Personal guarantee
  • Estimated total security value: $__________

• Check industry eligibility — some industries attract loadings or restrictions (cafés, hospitality, heavily owner-dependent service businesses)

  • Business industry: __________
  • Known lender restrictions for this industry? Yes / No / Unknown

• Estimate realistic loan amount: $__________

• Estimated interest rate and term: __________% over __________ years

• Estimated annual repayment: $__________

Resources: Bank Lending Criteria Checklist

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Section 3: Vendor Finance Assessment

Vendor finance — where the seller accepts deferred payment for part of the purchase price — is underused by buyers who don't know how to ask for it. Done well, it reduces your upfront capital requirement and aligns the seller's interest with a successful transition.

• Assess the seller's situation

  • Is the seller retiring fully? (More likely to agree to a deferred payment if they have other income)
  • Is the seller under time pressure to settle? (Less likely to negotiate vendor finance if they need cash now)
  • Does the seller have a mortgage over the business assets? (Must be discharged at settlement — complicates vendor finance)

• Determine a reasonable vendor finance ask — typically 10–30% of purchase price

  • Purchase price: $__________
  • Vendor finance target amount: $__________ (suggest __________ %)
  • Proposed repayment term: __________ months
  • Proposed interest rate (market rate or negotiated): __________% p.a.

• Draft your vendor finance ask — frame it as alignment, not hardship: "I'd like to structure part of the price as a deferred payment — it means you have ongoing interest in the business performing well during the transition, and it reduces my day-one debt servicing requirements"

• Assess security you'll offer — sellers typically want a fixed and floating charge over business assets, or a personal guarantee, for any deferred amount

  • Security to offer: __________

• Confirm no bank restriction on vendor finance — some bank lending facilities prohibit or limit vendor finance running simultaneously. Check with your broker before committing

Resources: Vendor Finance Negotiation Checklist

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Section 4: SMSF / Superannuation Options

Your SMSF generally cannot directly fund the purchase of an operating business, but can purchase the commercial premises the business occupies — freeing up personal capital for the business itself. See the full article on using superannuation in your financing stack before proceeding.

• Does the business have commercial premises?

  • Yes — worth pursuing SMSF property option / No — skip this section

• Assess SMSF balance available

  • Current SMSF balance: $__________
  • Available for property purchase (after liquidity reserve): $__________

• Get an independent property valuation — required for arm's-length transaction documentation

  • Estimated property value: $__________

• Check SMSF borrowing eligibility — limited recourse borrowing arrangements (LRBAs) allow SMSF to borrow against property; requires a separate bare trust structure

  • SMSF has sufficient balance for deposit (typically 20–30% of property value)? Yes / No
  • SMSF cash flow can service the loan from contributions and rental income? Yes / No

• Establish market rent — the SMSF must charge the operating business market rent for the premises; obtain a rent appraisal from an independent property manager

  • Market rent (monthly): $__________

• Engage SMSF-specialist accountant — not your general accountant; this area has specific compliance requirements

• Capital freed up for business purchase by SMSF property acquisition: $__________

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Section 5: Alternative and Private Lending

If the bank gap or equity gap is still not closed after Sections 1–4, consider alternative sources. These are generally more expensive but can bridge specific shortfalls.

• Non-bank business lenders — Scotpac, Moula, Prospa, OnDeck lend against business assets or cashflow at higher rates (10–20%+ p.a.); useful for bridging a gap or financing working capital post-acquisition

  • Potential amount available: $__________
  • Rate range: __________% p.a.

• Asset finance — if the business has significant plant, equipment, or vehicles, asset finance can be used to separately fund those assets, freeing purchase price financing for goodwill and other components

  • Estimated asset value in the business: $__________
  • Potential asset finance: $__________

• Private lenders / family loans — if available, private lending at agreed rates (document carefully with a formal loan agreement to satisfy ATO if interest deductibility is claimed)

  • Available: $__________
  • Interest rate to document: __________% p.a.

• Equity partner — bringing in a co-investor or business partner who contributes capital in exchange for equity; complicates ownership but can be the right solution for larger acquisitions

  • Considered? Yes / No
  • Proposed equity split: __________

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Section 6: Financing Stack Summary

Pull everything together. The total must reach — or exceed — the purchase price after accounting for acquisition costs (legal fees, stamp duty, due diligence advisors, typically 2–5% of purchase price).

Source	Amount	Interest Rate	Notes
Personal equity	$__________	—	Cash + home equity
Bank loan	$__________	_____%	_____ year term
Vendor finance	$__________	_____%	_____ months deferred
SMSF property	$__________	—	Releases personal capital
Alternative lending	$__________	_____%	Bridge/asset finance
Other	$__________	_____%	Family, equity partner
TOTAL	$__________

• Total financing stack reaches purchase price: Yes / No
• If no — gap to close: $__________
• Financing gap plan: __________

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Section 7: Serviceability Stress Test

Before committing to any offer, run this test.

• Calculate total annual debt service — all loans (bank, vendor, alternative) combined annual repayments: $__________

• Calculate minimum business earnings required — debt service ÷ 0.8 (allowing for 20% earnings shortfall buffer): $__________

• Compare to normalised EBITDA — is minimum earnings comfortably below EBITDA? Yes / No

• Apply a 2% rate rise scenario — recalculate annual repayments at interest rates 2% higher; still serviceable? Yes / No

• Calculate month-one cash flow — first month's combined loan repayments plus your living expenses; do you have that covered from personal savings if the business takes time to settle? Yes / No

• Sign-off: Financing stack is viable and stress-tested ☐

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Related resources

• Deal Structure Comparison Framework — company vs trust, asset vs share, how financing layers interact with structure
• Financial Readiness Checklist — personal financial readiness before you start the acquisition process
• Bank Lending Criteria Checklist — what banks specifically look for when assessing a business acquisition loan

More on deal structure and financing in Module 6 of the Playbook.