How much can you borrow to buy business

How much can you borrow to buy business

Published on 2022-09-22

Category: Small Business Owners, Business Growth

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Why reinvent the wheel you can buy a business? Many investors have made a fortune buying loss-making businesses, turning them around and then selling them. With proper due diligence, you can quickly find a profitable business with good cash flow and loyal customers. However, financing can often be a problem.

However, you can opt for a small business loan to buy a business. How much can you borrow to buy a business, you ask? Read on.

Is it a good idea to buy a business?

Compared to starting one from scratch, buying a business is much faster. For one, the business model would have already been validated and it may already be bringing in profits. It may be need a bit of optimisation in terms of operations, marketing or customer support. However, those are fairly small challenges to deal with.

If the business already has a strong balance sheet, you can be sure that getting a business loan won’t be a problem. All things considered, buying a business is certainly a better bet that starting one.

A quick ‘how-to-buy guide’ for buying a business in Australia:

Before you sign the business purchase agreement, make sure you analyse the following:

Future growth potential:

Ask yourself whether the business is scalable, and whether there might be faced with a conflict of interest with other businesses you might own. Review the finances of the business and create a revenue forecast based on the data.

Complete a business valuation:

Hire a professional business valuation expert to calculate how much the business is worth. This should include a complete analysis of its financial history including existing debts, average sales and any outstanding taxes.

Review the operations:

Review key aspects such as licenses, supplier contracts, inventory status, plant and machinery, etc. This can also help you decide how much to borrow to by the business.

Purchase offer:

If you’re convinced that the business is in good shape, make an offer and negotiate proactively until the existing owners agree to a reasonable sale price.

How to get a loan to buy a business in Australia?

If you need finance to purchase an existing business, you can choose from among a number of unsecured and secured business loans. Most lenders will offer up to $250,000 for unsecured loans and from $250,000 to $500,000 for secured loans.  The exact amount will depend on the financial health of the business you’re buying. For loans above $250,000, most banks will likely ask for collateral.

However, many online lenders are more flexible in how they assess credit risk which means your application has a much better chance of being approved.

Applying for a business purchase loan online is easy. Fill out an application form including the financials and other information. Specify the deposit amount you’re putting up to finance  the purchase. The application form might have a FAQ section for common questions like ‘how much deposit do I need for a business loan?’.  Provide details of any assets you might want to pledge as security and you’re done. You’ll hear back from the lender in 24 hours.

Tags: buying a business, loan to buy a business, How to get a loan to buy a business in Australia?, business purchase loan, business purchase loan online                                           



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