Quick answer
To finance buying a business in New Zealand, most buyers combine their own contribution with a loan secured over property or business assets, and sometimes vendor finance. Banks fund established, profitable businesses for experienced buyers; non-bank and private lenders help with property-backed or time-critical deals. Lenders look at the business's financial history, the buyer's experience, the price paid for goodwill, security and the plan to repay. Compare offers on total cost, security and conditions.
Key points
- Buyers usually combine their own money, a loan and sometimes vendor finance.
- Lenders assess the business, the buyer and the security together.
- Goodwill is hard to lend against; property or assets often fill the gap.
- Due diligence findings shape what lenders will offer.
Buying a business is one of the biggest purchases most owners ever make. It’s also one where the finance shelf is surprisingly varied, and where the way you structure the funding can make or break the first few years. A careful shopper looks at the whole basket: your own money, the lender’s money, and sometimes the seller’s.
How do buyers usually fund a business purchase?
Most acquisitions use a combination:
| Source | Role in the deal | Shopper’s note |
|---|---|---|
| Your own contribution | Shows commitment; reduces lender risk | Lenders usually expect some |
| Bank or non-bank loan | Funds the bulk of the price | Often secured over property or business assets |
| Vendor finance | Seller defers part of the price | Needs strong legal documents |
| Asset finance | Funds specific equipment or vehicles | Can reduce the main loan |
| Earn-outs | Part of the price depends on future results | Aligns price with performance |
business.govt.nz notes one creative option: a gradual handover where you pay off the sale price from profits. It’s essentially vendor finance, and it shows the seller backs the business.
What do lenders want to see?
Lenders funding a purchase are assessing three things at once: the business, the buyer and the security.
The business. Financial statements for recent years, trends, seasonality, customer concentration, key contracts and staff. business.govt.nz recommends using accountants to check the books and lawyers for the sale agreement, and lenders will often want to see the results of that due diligence.
The buyer. Your experience in the industry or in running a business, your contribution, and your personal financial position.
The security. Goodwill, meaning customer base and reputation, is hard to lend against because it can evaporate. Lenders often look for security over property, the business’s tangible assets via a general security agreement, or both.
Which stalls fund business purchases?
- Main banks fund established, profitable businesses for experienced buyers, often with property security. They’re usually the lowest-cost option and the slowest.
- Non-bank lenders may help when the buyer is new to the industry, the timeline is tight, or bank policy doesn’t fit.
- Private lenders can bridge a settlement deadline, usually with property security and a plan to refinance.
- Asset financiers can fund the equipment or vehicles in the sale separately.
Not sure which stall suits your purchase? Ask us; there’s no credit check to enquire.
What does acquisition finance cost?
Expect the usual items: establishment, legal and valuation fees; the total of repayments; and, for bigger deals, ongoing covenants and reporting requirements. Add the costs of due diligence and legal work on the purchase itself. Use the offer comparer to compare loan offers in dollars and our total cost guide to understand the sums.
Pay particular attention to:
- guarantees, which on purchase loans often extend to the buyer personally;
- covenants tied to the business’s performance;
- conditions precedent, such as due diligence sign-off or landlord consent to assign the lease; and
- settlement timing, which must line up with the sale agreement.
How should the finance shape the purchase?
Finance isn’t just how you pay; it affects whether the deal works. A few principles:
- Make sure the business can carry the debt. Repayments come from profits, so model them against conservative forecasts.
- Match terms to assets. Don’t fund long-lived goodwill with a short, expensive loan.
- Keep a buffer. New owners face surprises. Don’t borrow to the last dollar.
- Use the finance condition. Make the sale agreement conditional on finance, with enough time to arrange it.
- Negotiate with the vendor. Vendor finance or an earn-out can reduce what you need to borrow.
What does a careful acquisition shop look like?
Illustrative example. A couple buying a Queenstown tourism business for $650,000, much of it goodwill, contribute savings and approach their bank. The bank will lend against their home but wants two years of the business’s accounts under consistent ownership, which it has, and a cash-flow forecast. The vendor agrees to defer $100,000 for 18 months, payable from profits. An asset financier funds the two vans in the sale separately, secured only over the vans. The combined structure keeps the bank loan smaller, gives the couple room in their first winter, and shows the bank that the vendor backs the business.
What about franchises and partner buyouts?
Franchise purchases often come with a franchisor that has relationships with particular lenders, and some lenders are more comfortable with established franchise systems because the model is proven. Still compare at least one alternative offer. Buying out a business partner is a different shape of deal: there’s no new business to assess, but the lender will look at how the remaining owner will cope with the full workload and the extra debt. In both cases, the same shopping habits apply: get every cost in writing, check the security and guarantees, and compare total dollars.
What should you do before you sign the sale agreement?
- Talk to lenders early about appetite and likely structure.
- Make the sale conditional on finance and due diligence, with realistic timeframes.
- Get your accountant and lawyer involved.
- Prepare a document pack: see documents lenders ask for.
- Think about negotiation points with both the lender and the vendor; see negotiating terms.
Ready to fund the business you’ve found?
Tell us about the business, the price and what you’re contributing. Enquiring is free, involves no credit check, and your details stay with one specialist rather than being spread across the market. A real person works through the structure with you and calls to talk it over. Please be accurate about the price, your contribution and any property on the form, so we can match you to the right lender from the start. See if you qualify.
Frequently asked questions
How much deposit do I need to buy a business?
It varies by lender, business and security. Lenders generally want buyers to contribute their own money, and the required contribution is higher when much of the price is goodwill rather than tangible assets or property.
Can I use my house to finance a business purchase?
Yes, property-secured lending is a common way to fund business purchases, particularly the goodwill portion. It puts your property at risk, so get independent legal advice and stress-test the business's ability to repay.
What is vendor finance?
Vendor finance is when the seller lets you pay part of the price later, often from the business's profits. business.govt.nz mentions a gradual handover where you pay the sale price from profits as one option. It needs a solid legal agreement.
What do lenders look at when funding a business purchase?
The business's financial statements and trends, the price and how much is goodwill, your experience in the industry, your contribution, the security offered, and a forecast showing the loan can be repaid.