Can I Get a Loan to Buy a Business? What NZ Banks Look For
Buying an existing business can be a great way to step into business ownership, expand an existing operation, or build wealth through an established company.
But once you've found a business you want to buy, there's usually one very important question:
Will the bank actually lend me the money to buy it?
Getting a loan to buy a business in New Zealand is quite different from getting a home loan. There isn't a standard deposit, lending percentage or formula that applies to every business purchase.
Instead, banks look at the whole transaction, including the business you're buying, its cashflow, the purchase price, your experience, the security available and how the proposed debt will be repaid.
Here's what New Zealand banks typically look at when assessing a loan to buy a business.
Can you get a loan to buy a business in New Zealand?
Yes. New Zealand banks and other lenders can provide finance to purchase an existing business.
Depending on the transaction, business acquisition finance may include a combination of:
Bank term lending
Cash or equity from the purchaser
Equity in residential or commercial property
Lending secured against business assets
Asset finance
Vendor finance
Working capital facilities
Non-bank or specialist business lending
The right structure depends on the business, the purchaser and the transaction.
For a more detailed breakdown of the different funding options available, read our guide to [how to fund a business purchase in New Zealand].
But before looking at how the purchase can be funded, it helps to understand what a bank will assess when deciding whether to lend.
1. Can the business afford the loan?
Cashflow is one of the most important factors when a bank assesses finance to buy a business.
The lender needs to be comfortable that the business will generate enough sustainable cashflow to meet its existing commitments, pay you appropriately and service the new acquisition debt.
Banks will generally look at several years of financial information, which could include:
Revenue
Gross profit
EBITDA or operating profit
Net profit
Existing debt repayments
Shareholder salaries
One-off or unusual expenses
Capital expenditure requirements
Working capital requirements
Forecast earnings
This is where the numbers can become more nuanced than simply looking at the profit shown in the financial statements.
For example, there may be legitimate adjustments to the historical earnings to reflect what the business could look like under new ownership. Equally, a lender may take a more conservative view of certain income or adjustments.
Ultimately, the bank wants confidence that the business can comfortably service the proposed acquisition debt, not just that it made a profit last year.
2. How much deposit do you need to buy a business?
One of the most common questions we get is:
“How much deposit do I need to buy a business?”
Unlike buying a residential property, there isn't one standard deposit percentage for buying a business in New Zealand.
The amount of equity you'll need to contribute can depend on:
The type of business
Purchase price
Strength and consistency of cashflow
Tangible assets being purchased
Available security
Your financial position
Your industry and management experience
The proposed lending term
The lender's appetite for the industry and transaction
Two businesses selling for exactly the same price could require completely different funding structures.
This is why it's worth understanding your likely borrowing capacity before signing an unconditional agreement to purchase a business.
3. What security is available?
When assessing a business purchase loan, banks will also consider what security supports the lending.
This could include:
Residential property
Commercial property
Plant and equipment
Vehicles
Other business assets
A general security agreement over the business
Personal or director guarantees
However, having a house isn't necessarily a prerequisite for buying a business.
Some transactions can be funded primarily against the cashflow and assets of the business itself, particularly where the business has strong, established earnings.
Other transactions may require additional security or a larger equity contribution.
The key question isn't simply:
“Do you own a house?”
It's:
“Does the overall transaction provide the lender with an acceptable combination of cashflow, equity, security and risk?”
4. Does your experience matter when getting a business loan?
Yes, particularly when you're borrowing money to purchase an established business.
Banks aren't only assessing the business. They're also assessing you as the future owner.
They may want to understand:
Your experience in the industry
Your management experience
Your financial position
Your previous business ownership experience
How involved you'll be in the business
Your plan for taking over from the existing owner
Whether key staff will remain after settlement
Someone purchasing a business they've worked in for several years may present a different risk profile from someone entering an unfamiliar industry for the first time.
That doesn't necessarily mean you can't finance a business outside your current industry, but the bank may want to understand how you'll manage the transition and any gaps in your experience.
5. What exactly are you buying?
The composition of the purchase price matters.
A $2 million business purchase isn't necessarily $2 million of assets the bank can take security over.
The purchase price could include:
Goodwill
Plant and equipment
Vehicles
Stock
Intellectual property
Customer contracts
Commercial property
A business with significant tangible assets may be financed differently from a professional services business where much of the value sits in goodwill and recurring client relationships.
This is one reason why business acquisition finance isn't simply about the purchase price.
The lender needs to understand what they're financing and the underlying value and cashflow supporting the debt.
6. How reliant is the business on the current owner?
Imagine buying a profitable business and then discovering that most of its customers only dealt with the previous owner.
That's a risk for you, and it's a risk for the bank.
When assessing a loan to purchase a business, lenders may look at things such as:
Customer concentration
Recurring or contracted revenue
Key employees
Supplier concentration
Reliance on the existing owner
Length and quality of customer contracts
Industry conditions
Barriers to entry
Succession and transition arrangements
Where the existing owner is critical to the business, a transition period or vendor involvement after settlement can sometimes help reduce that risk.
7. What will your financial position look like after settlement?
Having enough money to complete the purchase is only part of the equation.
The bank will also want to know what happens the day after you take ownership.
Will the business still have enough working capital?
Do you have a financial buffer if revenue is softer than expected?
Will you need additional funding for stock, wages, tax, equipment or growth?
Have you used every dollar of your available cash as the deposit?
A good business acquisition funding structure should consider both the purchase itself and the ongoing funding requirements of the business.
Running out of cash three months after settlement because every available dollar went into buying the business isn't a great outcome for anyone.
8. What happens if the bank won't fund the full purchase price?
A bank not funding 100% of your proposed structure doesn't necessarily mean the transaction is over.
There may be other ways to structure the purchase.
For example, a transaction could potentially combine:
Purchaser equity + bank lending + asset finance + vendor finance
Alternatively, part of the purchase price may be deferred, additional security could be introduced, or the lending could be structured across different facilities and lenders.
The appropriate solution will depend on the transaction and the risks involved.
Our guide to [how to fund a business purchase] goes into the different business purchase funding options in more detail.
Get your funding position clear before you make an offer
If you're considering buying a business, one of the best things you can do is understand your funding position early.
You don't necessarily need to wait until you've found the perfect business.
An adviser can help you understand:
What information a bank will require
How much you may be able to borrow
How much equity you may need
Potential business acquisition loan structures
Whether property security is likely to be required
What different lenders may consider
What conditions could be attached to the funding
That means when the right opportunity comes along, you have a much better idea of what is achievable.
At Vesta Finance & Advisory, we help Kiwis navigate business lending and business acquisition finance. We work with business owners and prospective purchasers to understand the transaction, assess different funding options and present the opportunity to appropriate lenders.
If you're thinking about buying a business in New Zealand, talk to us early. We can help you work through the numbers and understand what your funding options could look like before you commit to the purchase.
Frequently Asked Questions About Loans to Buy a Business
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Yes. Banks and other lenders can provide business acquisition finance to purchase an existing business. The amount you can borrow and the structure of the lending will depend on factors including the business's cashflow, purchase price, available security, your equity contribution and your experience.
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There is no universal deposit requirement for buying a business in New Zealand. The equity required depends on the strength of the business, its cashflow, available assets and security, the purchaser's financial position and the lender's appetite for the transaction.
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Yes. Not every business purchase requires residential property as security. Some businesses can support lending based on their cashflow and assets. However, the available structure will depend on the individual transaction and lender requirements.
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There isn't a standard borrowing multiple that applies to every business purchase. A lender will assess the sustainable cashflow of the business, proposed debt repayments, available security, your contribution and other risks associated with the transaction.
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Banks will typically want historical financial statements for the business, details of the proposed purchase, information about the purchaser, the proposed funding structure and potentially financial forecasts. Additional information may be required depending on the business and transaction.
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Yes. Equity in residential property can form part of a business acquisition funding structure. However, using your home to support business borrowing introduces additional risks that should be carefully considered before proceeding.
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No. KiwiSaver can only be used for your first home.
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Vendor finance is where the seller agrees to leave some of the purchase price in the business transaction rather than receiving the entire amount at settlement. The purchaser then repays that amount under agreed terms. It can sometimes form part of a broader business acquisition funding structure.
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Ideally, you should understand your likely funding position before making a commitment. You may not have final approval until the bank has assessed the specific business, but early discussions can help establish your likely borrowing capacity, equity requirements and potential funding structure.
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Business acquisition finance generally requires more assessment than a standard residential mortgage. Timing will depend on the complexity of the transaction, quality of the financial information, lender requirements, valuation or due diligence requirements and how quickly information can be provided.
About Vesta Finance & Advisory
Vesta Finance & Advisory is an independent financial advisory firm based in Hawke's Bay, helping clients throughout New Zealand with residential lending, business lending, property investment finance, KiwiSaver advice and long-term wealth planning. We work with professionals, business owners, property investors and families to create lending strategies that support their financial goals—not just today, but for years to come.
Disclaimer : This article is for general information and educational purposes only. It does not constitute personalised financial advice. Private Banking eligibility, lending criteria and available services vary between banks and depend on your individual circumstances. Before making any financial decisions, we recommend seeking personalised advice from a qualified financial adviser.
Posted August 2026