How much deposit do you need to buy a business? What counts, and what doesn't

There’s no magic deposit figure for buying a business. The amount you’ll need to bring depends on what you’re actually buying, because lenders treat each part of the price differently. A shop full of stock and equipment is easier to borrow against than one whose value is mostly reputation.

So the useful question isn’t “what percentage?” It’s “which part of this price can a lender fund, and which part has to come from me, my property or the seller?” Here’s how to work that out before you make an offer.

What makes up the price of a business?

A headline price usually bundles several things that behave very differently when you ask for finance:

Part of the price	What it is	How easy is it to fund?
Plant and equipment	Machines, vehicles, fit-out, fixtures	Easiest. It’s physical, so it can secure its own loan
Stock	Goods held for sale	Often paid separately at settlement; usually funded from cash or working capital
Goodwill	Customers, location, brand and trading record	Hardest. A lender can’t repossess and sell it
Lease and licences	Right to occupy and operate	Not funded as such, but a short lease can sink the whole deal

Ask for the contract’s price allocation early. It shapes how much a lender will advance and how the purchase is treated for tax. Our guide to financing goodwill when you buy a business explains the hardest piece in more detail.

Why does goodwill push the deposit up?

Because it’s the part with the least to fall back on. If a business with $300k of goodwill fails, there’s nothing to sell. A lender covers that risk in one of three ways: more of your own money in the deal, extra security such as property you own, or a seller who stays exposed by carrying part of the price.

That’s why two buyers purchasing businesses at the same price can need very different contributions. Someone buying a trade business with a workshop full of equipment has more to offer a lender than someone buying a consultancy where the value is the client list.

What counts as your own contribution?

Not everything that gets you to settlement counts the same way in a lender’s eyes. Here’s a practical guide, though each lender has its own policy:

Source	Usually treated as
Cash in the bank	Your contribution, ideally held for a while
Sale proceeds from an asset you’re selling	Your contribution, once it’s actually received
Equity in property you own	Security rather than cash, but it can reduce the cash needed
Deposit already paid to the seller	Counts once you can show where it came from
Vendor finance (the seller carries part of the price)	Borrowed money, but it can be part of the funding stack
Earn-out (price paid later, tied to results)	Reduces the money needed at settlement; not cash from you
Gifts or loans from family	Needs to be declared; lenders treat these cautiously

The line to remember: a lender wants to see what you have at risk. Money that was borrowed, even from the seller, is part of the structure, but it’s rarely a substitute for skin in the game.

Seller-funded options are worth understanding because they change the size of the cheque you need on the day. If you want the paperwork side, our page on business acquisition loans shows how the funding fits together.

What does a worked example look like? (illustrative)

This example is made up. It isn’t a real client or deal.

Sam is buying a small retail business listed at $500k, plus stock at valuation on settlement day.

Item	Amount
Plant, equipment and fit-out	$120k
Goodwill	$380k
Price excluding stock	$500k
Stock at valuation (estimated)	$40k
Legal, accounting and transfer costs (estimated)	$15k
Working capital buffer for the first three months	$45k
Total cash needed across the deal	$600k

Here’s one way Sam could fund it:

• $100k equipment finance against the plant and fit-out, repaid over the working life of the equipment.
• $250k property-backed loan using equity in Sam’s home, because goodwill alone doesn’t give a lender enough security.
• $75k vendor finance from the seller, repaid over two years, which keeps them engaged during handover.
• $175k of Sam’s own cash, covering the remaining price, stock, costs and part of the buffer.

Notice what happened. Sam’s deposit on the price wasn’t one number. The cash needed was driven by stock, costs and buffer as much as by the price itself, and the property equity did the heavy lifting on goodwill. Change the mix (a bigger equipment share, a more generous seller) and Sam’s cash requirement changes too.

If you’d like to test your own version, the loan matcher can point you at the right shape of finance, or you can see how your deal might be funded with a real person.

What costs sit outside the purchase price?

First-time buyers often tally the price and forget the rest. Budget for:

• Stock at valuation. Many contracts add stock on the day of settlement, counted jointly. The ATO notes that a sale of a going concern can be GST-free if the conditions are met, which affects how much cash you need at settlement. See our GST going concern guide.
• Legal and accounting fees. Contract review, due diligence and structuring advice.
• Transfer costs. Duty where your state applies it to business transfers, lease assignment fees and licence transfers.
• Insurance from day one.
• Working capital. Wages, rent, supplier payments and a bad week or two before the business settles under your ownership.

That last one trips up more buyers than any other. A business can be fully funded at settlement and still be tight a month later.

What do lenders check before they accept your contribution?

Expect questions on:

1. Where the money came from. Statements showing savings built over time are stronger than a sudden deposit.
2. The seller’s records. business.gov.au suggests reviewing three to five years of tax returns, BAS, balance sheets and profit and loss records, plus sales records, before you sign.
3. Security interests. The business.gov.au checklist also points to the Personal Property Securities Register for checking claims over assets. Check the PPSR so you aren’t surprised by existing finance.
4. The lease. Enough remaining term and options to cover your loan.
5. Your experience. A buyer who has run something similar often needs to prove less.

How can you bring the deposit down legitimately?

• Use equity you already have. A property-backed business loan can replace cash with security.
• Negotiate seller participation. Vendor finance or an earn-out spreads the price and keeps the seller invested in a smooth handover.
• Split the purchase. Buying the equipment and trading assets on one loan and the goodwill on another often works better than one blended facility.
• Negotiate stock terms. A fair stock-take process and agreed payment timing avoid a surprise on the day.
• Choose a smaller first step. Buying a smaller business, or a part-share, can make sense if it’s the realistic starting point.

None of these is a trick. They’re ways of matching the structure to the job, which is the idea behind our guide to matching the loan to the job.

Ready to find out how much you’d really need?

Buying a business is one of the most exciting plans an owner can have, and the deposit question is usually less scary once the pieces are on the table. The right structure can mean the difference between needing every dollar you’ve saved and having room left to run the place well.

If you’d like to see where you stand, we’d love to help. Check your options here. The enquiry takes about 60 seconds and there’s no credit check when you first enquire, so your credit file isn’t touched just for asking. We don’t send your details to a pile of lenders, and a real person looks at your situation and phones you to talk it through. Please fill the form in accurately, including the price, what’s included and what you can contribute, so we can match the right option first time.

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