Can You Get an Unsecured Loan to Buy a Business?

You can get an unsecured loan to buy a business in Australia, but only if you already own a business with enough turnover to support the repayment. Lenders assess your existing business, not the one you are buying. If you do not have an existing business, you will need a secured loan backed by property or other assets, with the acquired business's cashflow covering the repayments.

Why this is more complicated than most articles suggest

Most search results for this query list unsecured business loan products without explaining a critical requirement: the borrower needs an existing, trading business. One in five Australian SMEs reports difficulty obtaining finance, according to a 2025 Banjo Loans and RBA survey, and a major reason is applying for the wrong product. Understanding which pathway is actually available to you before you apply saves time, protects your credit file, and gets you to the right lender faster.

How unsecured acquisition lending actually works

When a lender approves an unsecured loan to buy a business, they are lending to your existing business based on its current financial position. The acquisition target's revenue, profitability, and potential are secondary. The lender's primary question is whether your existing operation generates enough cashflow to service both its current obligations and the new loan repayment.

This means the loan application looks almost identical to a standard unsecured business loan application. You will need an active ABN, at least 6 to 12 months of trading history, minimum monthly revenue of $5,000 to $10,000, and 3 to 6 months of bank statements showing consistent deposits.

The critical difference is that the lender will also want to understand the purpose of the funds. Buying a business is a larger, lumpier use of capital than working capital or equipment. Some lenders are comfortable with acquisition purposes, while others restrict their unsecured products to operational spending. A broker can identify which lenders on their panel accept acquisition as a stated loan purpose.

Which pathway fits your situation

The table makes the decision clear. If you do not already own a business, an unsecured loan is not available to you. Your options are a secured loan (if you have property or substantial assets) or vendor finance (where the seller finances part of the purchase price).

The secured alternative: buying a business without an existing one

If you do not have an existing business, a secured loan is the standard pathway to business acquisition in Australia. The lender takes security over property, a term deposit, or other assets you own. The key assessment shifts from your business trading history to two factors: the value of your security and whether the acquired business's cashflow can cover the loan repayments.

Secured acquisition loans typically offer rates between 6.8 and 8.2 percent per annum, significantly lower than unsecured rates of 9.5 to 18 percent. The trade-off is time and documentation. Expect 2 to 4 weeks for approval because the lender needs a property valuation and legal documentation. You will also need a detailed business plan, the target business's financial statements, and a clear explanation of how the acquisition will be funded and operated.

Banks are the most competitive lenders for secured acquisition finance because the property backing reduces their capital requirements. If you have a relationship with a bank and sufficient equity in your home or investment property, this is often the cheapest way to fund a business purchase.

Vendor finance: when neither unsecured nor secured works

Vendor finance is where the seller of the business agrees to receive part of the purchase price over time rather than upfront. This is more common than most buyers realise, particularly for smaller businesses where the seller is motivated to exit and the buyer has operational experience but limited capital.

A typical vendor finance arrangement involves the buyer paying 50 to 70 percent of the purchase price upfront (often funded by a separate loan) with the remaining 30 to 50 percent paid over 1 to 3 years. The seller effectively becomes a lender, which means they have a direct interest in the business succeeding after the sale.

Vendor finance works well when combined with a secured or unsecured loan for the upfront portion. It reduces the total amount you need to borrow from a bank or non-bank lender, which improves your chances of approval.

How to strengthen your position for an unsecured acquisition loan

If you already own a business and want to use an unsecured loan to fund an acquisition, these steps improve your chances.

Build your revenue runway. Lenders want to see that your existing business can absorb the loan repayment without strain. If the acquisition will cost $200,000 and your monthly repayment would be around $6,000, your existing business needs to demonstrate it can comfortably cover that on top of current expenses. Three to six months of strong bank statements is the minimum evidence.

Separate the acquisition from working capital. Present the acquisition as a growth strategy, not a lifeline. Lenders are more comfortable when the existing business is healthy and the acquisition adds capacity, customers, or revenue rather than replacing a declining core.

Prepare a clear integration plan. Even for unsecured loans, some lenders will ask how you plan to operate the acquired business. A one-page summary covering staffing, customer retention, and revenue projections for the first 12 months shows the lender you have thought beyond the purchase price.

Know which lenders accept acquisition purposes. Not all unsecured lenders allow their products to be used for business purchases. Applying to a lender that restricts loan purpose to working capital wastes time and adds a credit enquiry to your file. Check the qualification requirements and talk to a broker who knows which lenders on their panel are open to acquisition funding.

This article is general information only and is not financial advice.