Need a Loan to Buy a Business? Consider how we can assist.

The loan options for buying an enterprise can vary depending on what is included in the sale. Some elements of the sale may be separated with different funding to achieve a more cost-effective outcome. Alternatively, buyers may apply for a comprehensive solution which includes goodwill, stock, equipment, fixtures and fittings, digital assets and all other inclusions.

The location of an enterprise being purchased would not affect the type of funding products suited to the acquisition. Where the operation being purchased is being offered as the security for the funding, the location may have an impact on the financing. The location of the operation may impact the risk assessment of the funding application. Lenders may assess the area in regard to the prospects for the operation and hence projected cash flow and the viability of the operation as suitable security.

The goodwill of an operation is not a tangible asset and as such may not be considered as suitable security for a secured funding product. When purchasing an operation as ‘goodwill only’ an unsecured funding product may be suitable. The strength of the cash flow is often considered by lenders when approving unsecured loans. Buyers may also consider a secured option and offer other forms of property or assets as security against the funds.

When purchasing a café, the type of funding most suited may depend on what is included in the purchase. It may include the goodwill, fixtures and fittings, digital assets such as the website and possibly larger items of equipment such as refrigeration, commercial stoves and other items. The type of funding may involve one secured funding package or several smaller credit products individually suited to different items. Effectively splitting the equipment and goodwill into separate funding.

The commercial lending market is extensive with both major banks and non-bank lenders active in the sector. A specialist lender in the area of funding ongoing operation purchases may be sought. Some lenders may specialise in financing specific industries such as hospitality while others may have a broader offering. Buyers may choose to engage a specialist broker to assist with the funding.

When purchasing an operation and the premises, buyers may have a number of options in regard to funding arrangements. Lenders may be in a position to include the entire purchase into one funding package or it may be seen as more cost-effective to split the operation and the premises into two separate contracts. Property funding may be more attractive for the premises and a secured commercial product for the operation.

The security required on commercial financing to purchase an ongoing operation will be subject to lender approval. The operation itself may be considered suitable security. This may be assessed on the strength of the cash flow. Buyers may also consider offering other property or assets as collateral for the funding.

Where a purchase of an operation is an initial venture, the personal credit history and financial position of the buyer would usually be assessment in the application approval process. The strength of the cash flow of the existing delivery operation would form an integral part of the approval process. Should both be considered acceptable, a secured commercial financing product may suit the acquisition.

When purchasing an operation with vehicles under current financing arrangements, the current leasing entity would need to finalise the funding contract prior to purchase. The buyer could then take on a new funding arrangement for the vehicles. Where transferring a current vehicle lease to another party is requested, buyers should engage the advice of a specialist in commercial motor vehicle lending.

Yes. When purchasing an ongoing concern with strong cash flow, the buyer may put up the operation as security against the funding for a secured commercial product. Acceptance of security as suitable would be subject to lender approval.