Buying an existing business can give you a faster start than building one from the ground up. You may gain established customers, trained staff, working systems and revenue from day one.
However, before making an offer, you need to answer an important question: how much money will you need to contribute yourself?
This matters in a large and diverse business market. Australia had approximately 2.73 million actively trading businesses at 30 June 2025. During 2024–25, 437,150 businesses entered the market, while 370,500 exited. In addition, 97.3% of Australian businesses had fewer than 20 employees.
Therefore, one deposit rule cannot apply to every business acquisition.
The Short Answer
As a general planning guide, buyers may need to contribute around 20% to 40% of the purchase price when applying for business acquisition finance in Australia.
Nevertheless, this is not a fixed lender rule. Some buyers may need a larger deposit, particularly when the business relies heavily on goodwill, has inconsistent earnings or operates in a higher-risk industry.
On the other hand, the cash contribution may be lower when the purchase includes valuable assets, strong cash flow, property security or vendor finance.
What Does a Business Purchase Deposit Cover?
Suppose you are buying a business for $800,000.
- A 20% contribution would be $160,000.
- A 30% contribution would be $240,000.
- A 40% contribution would be $320,000.
The lender would then need to finance the remaining purchase price.
However, your deposit is not the only cash you may need. Other expenses can include legal advice, accounting fees, due diligence, business valuations, stock, lease bonds and licence transfers.
As a result, having enough money for the deposit does not always mean you have enough money to complete the purchase safely.
What Determines How Much Deposit You Need?
Business Cash Flow and Profitability
First, lenders want to know whether the business can afford the proposed repayments.
They may review historical profit, recent management accounts, existing liabilities and cash-flow forecasts. Although strong sales are helpful, turnover alone does not repay a loan.
Instead, lenders focus on sustainable earnings and the cash remaining after wages, rent, suppliers, tax and other operating costs have been paid.
A profitable business with stable earnings may support a stronger finance application. In contrast, inconsistent results may lead to a lower loan amount and a larger deposit requirement.
Assets Versus Goodwill
Next, lenders consider what you are actually buying.
A business purchase may include vehicles, machinery, stock, intellectual property, customer contracts and goodwill.
Tangible assets can sometimes be financed separately through an asset finance broker. For example, an equipment finance broker in Melbourne may structure eligible machinery or vehicles under an asset finance facility rather than placing the entire amount under the acquisition loan.
Goodwill is more difficult to finance because its value depends on customers, reputation and continued trading. Consequently, a goodwill-heavy business may require a larger contribution or additional security.
Available Security
Property equity, commercial property, equipment and other acceptable assets may strengthen an application.
For instance, a buyer with usable property equity may be able to reduce the cash contribution required. Secured business loans may also provide higher limits or longer terms than unsecured business funding.
Even so, security does not replace serviceability. The acquired business must still produce enough cash to manage the repayments.
Your Industry Experience
Lenders also assess the buyer.
Relevant industry experience can show that you understand customers, staffing, suppliers and day-to-day operations. Previous management or business ownership experience may also improve lender confidence.
For example, an established transport operator buying another logistics business may be assessed differently from a first-time buyer with no transport experience.
Where experience is limited, the lender may ask for a larger deposit, stronger security or a clear transition period with the seller.
The Purchase Price
Importantly, a lender does not automatically accept the price agreed between you and the seller.
If you agree to pay $1 million but the financial performance only supports a value of $850,000, you may need to cover the difference yourself.
Therefore, independent due diligence is essential. The Australian Government recommends reviewing three to five years of tax returns, BAS records, balance sheets, profit and loss statements, cash-flow statements and sales records before buying an existing business.
Can Vendor Finance Reduce Your Deposit?
Vendor finance is an arrangement where the seller agrees to receive part of the purchase price over time.
For example, a $1 million transaction could include:
- $250,000 from the buyer
- $600,000 from a lender
- $150,000 in vendor finance
This can help close a funding gap. However, the primary lender will assess the vendor loan’s repayment terms, priority and security position.
Additionally, vendor finance is not always treated as the buyer’s genuine contribution. For that reason, the arrangement should be reviewed by a lawyer, accountant and business finance broker.
Contract Deposit Versus Buyer Contribution
The deposit written into the sale contract is not necessarily the same as the equity contribution required by the lender.
For example, the contract may require a 10% deposit when you sign. However, the lender may still expect you to contribute 30% of the total purchase price by settlement.
Make sure both amounts are clear before signing an unconditional contract.
Using every available dollar for the purchase deposit can create immediate cash-flow pressure.
After settlement, the business still needs money for wages, rent, stock, suppliers, insurance and tax. Customer payments may also take several weeks to arrive.
Therefore, the strongest structure is not always the one with the lowest deposit. It is the structure that allows you to complete the acquisition while keeping enough working capital available.
In some cases, invoice finance or a separate SME finance facility may help support cash flow after settlement.
How a Business Finance Broker Can Help
Business acquisition loans are rarely structured around the purchase price alone.
A business finance broker can assess the financials, goodwill, equipment, property security, vendor finance and working-capital requirements.
A business loan broker in Melbourne may compare options across banks and non-bank commercial lenders in Melbourne. Meanwhile, a commercial finance broker in Melbourne can help present the transaction around its genuine strengths, including cash flow, contracts, assets and buyer experience.
For buyers in Melbourne’s south-east, working with finance brokers in South-East Melbourne or a business loan specialist in Dandenong may also provide useful local market knowledge.
How Much Should You Prepare?
A contribution of 20% to 40% is a practical starting point. However, your final requirement will depend on:
- The business’s earnings
- The level of goodwill
- Available assets and security
- Your credit profile and experience
- The purchase valuation
- Vendor support
- Working-capital needs
Before making an unconditional offer, have the transaction assessed by a commercial loan broker, accountant and lawyer.
The Bottom Line
There is no single deposit that applies to every Australian business purchase.
While many buyers may plan around 20% to 40%, the real figure depends on the business, the buyer and the way the transaction is structured.
At Xpress Finance, we help Australian business owners explore business acquisition loans, asset finance, commercial finance and tailored finance solutions for SMEs.
With access to more than 50 lenders, our team can review the transaction, identify potential funding gaps and explain how different lenders may assess your application.
Speak with the Xpress Finance team before committing to your next business purchase.
Frequently Asked Questions
Can I buy a business with a 10% deposit?
It may be possible in limited situations, particularly when strong property security, valuable business assets or vendor finance is available. However, many buyers should prepare for a higher contribution.
Do I need property security to buy a business?
Not always. Some lenders may consider the business’s cash flow and assets. However, property security can improve the available options and may reduce the cash deposit required.
Can equipment finance reduce my business purchase deposit?
Potentially. Eligible vehicles, machinery or equipment may be financed separately through asset finance. This can reduce the amount required under the main acquisition facility.
Is vendor finance counted as a deposit?
Not automatically. Each lender treats vendor finance differently and will review its repayment terms and priority. The buyer may still need to provide a genuine cash contribution.
Can a first-time buyer get a business acquisition loan?
Yes, but lenders will closely assess the buyer’s experience, deposit, credit history, business plan and ability to operate the acquired business.