Guide
Vendor Finance
When the seller leaves part of the price in the deal, the funding either gets stronger or gets complicated. The difference is whether the vendor finance is designed into the structure from the start. That design is what we do.
- Founded by two former bankers
- Commercial and business finance specialists
- Perth based, working Australia wide
- MFAA member
The quick answer, up front
Vendor finance is an arrangement where the seller of a business is paid part of the purchase price over time instead of in full at settlement. The buyer pays a portion up front, funded by a deposit and usually a bank loan, and the seller carries the remainder as a loan repaid on agreed terms. It is common in Australian business sales, it is not inherently risky, and lenders assess it as part of the overall funding structure rather than as a warning sign.
Three numbers frame almost every conversation about it. As a guide, lenders fund business purchases against a deposit of 20% to 50% of the price. The average advertised asking price for an Australian business was $658,623 in December 2025, and businesses marked sold in the December 2025 quarter averaged about $487,000 in advertised price (Bsale Australia Business Sales Market Report, Q4 2025, published 14 January 2026; advertised figures, not settled prices). At those price points, the gap between what a lender will advance and what a seller is asking is frequently the exact space vendor finance exists to fill.
Where it sits in the funding stack
Most business purchases are funded from a stack rather than a single loan: the buyer's deposit or property equity, a bank or specialist lender term loan for the core of the price, sometimes vendor finance for a slice, and a working capital line for the transition. An illustration, not a quote: on an $800,000 purchase, a buyer holding a $240,000 deposit (30%) might fund $400,000 (50%) through a lender and ask the seller to carry the remaining $160,000 (20%) over 2 to 3 years. Whether that shape works depends on the lender's assessment of the business, the ranking between the two debts, and whether the cash flow services both. The full stack is covered in our guide to getting a loan to buy a business.
What the seller's money is telling you
A seller who leaves money in the business is signalling confidence in its future earnings, which is why vendor finance can strengthen a deal rather than weaken it. The signal runs the other way too. On a sale priced largely on goodwill, a seller who refuses to carry any part of the price is worth a follow-up question, because the person who knows the earnings best is declining to back them. Neither signal decides a deal on its own, but both belong in your read of it, alongside the diligence your accountant runs on the numbers themselves.
How lenders read vendor finance
A credit team looks at vendor finance through three questions. How does the vendor loan rank against the bank's own facility? What are its repayment terms, and can the business service both debts from the same cash flow? What happens under the documents if trading dips during the handover? None of these questions is hostile. They are structural, and every one of them is answerable at the term sheet stage. The deals that stall are the ones where the vendor finance was agreed between buyer and seller first and shown to the lender afterwards, because by then the answers are locked in whether they suit the lender or not.
This is the same design-it-in-early principle that runs through the rest of an acquisition finance structure, and it matters most where the price is heavy with intangible value. On a goodwill-dominant sale, vendor finance is one of the standard ways the gap between the vendor's price and the lender's appetite gets closed, alongside a larger deposit or additional security. How lenders size that goodwill component is covered on our goodwill finance page.
Getting it papered properly
The commercial terms of a vendor loan, the amount, the term, the rate, the security and the underperformance provisions, are negotiated between buyer and seller and documented by their lawyers. Our role is the finance architecture around it: making sure the vendor finance, the bank debt, the deposit and the working capital line are designed as one structure a credit team can approve, before anyone signs anything. You can map the likely shape of your own deal with the business acquisition calculator, which shows where the funding pressure sits before you make an offer.
Why buyers put us in the deal
Bankers first, brokers second. Rockwall was founded by two former commercial bankers. We structure a deal with vendor finance in it the way the person approving it will read it, because we spent years on that side of the desk reading them.
Access to more than 40 lenders. Through our Finsure accreditation we can match a purchase to the lender whose current appetite fits it, from major banks to the specialist lenders with more room for goodwill-heavy or vendor-financed structures.
Structure before application. We test the whole stack, deposit, term debt, vendor finance and working capital, against lender policy before anything is lodged, so the application reads as one coherent deal rather than a set of afterthoughts.
Licensed and accountable. We are MFAA members and Credit Representatives (579184, 579182 and 580433) of Finsure Finance & Insurance Pty Ltd.
Frequently asked questions
What is vendor finance when buying a business?
Vendor finance is an arrangement where the seller of a business is paid part of the purchase price over time instead of in full at settlement. The buyer pays a portion up front, funded by their deposit and usually a bank loan, and the seller carries the remainder as a loan to the buyer, repaid over an agreed period on agreed terms. It is common in Australian business sales and is assessed by lenders as part of the overall funding structure.
Is vendor finance risky when buying a business?
No, not inherently. Vendor finance is common in business sales and can strengthen a deal, because a seller willing to leave money in the business is signalling confidence in its future earnings. What matters is how it is structured: the terms, the security, how it ranks alongside bank debt, and what happens if the business underperforms during the earn-out period. Lenders treat vendor finance as part of the overall structure, so it needs to be designed in from the start, not added on.
How much of the purchase price can vendor finance cover?
There is no published Australian dataset setting a standard vendor finance percentage, and any fixed figure quoted online traces back to broker commentary rather than lender policy or an industry report. In practice the proportion is negotiated deal by deal, and it is shaped by what the bank will fund, what deposit the buyer holds, and how much confidence the seller has in the earnings. The workable number for a specific deal is the gap between the price and what the lender plus the deposit will cover, tested against terms the seller will actually accept.
Do lenders count vendor finance toward my deposit?
Lenders assess vendor finance as part of the funding structure rather than as a substitute for the buyer's own contribution. As a guide, lenders fund business purchases against a deposit of 20% to 50% of the price, and they still want to see real commitment from the buyer within that. Vendor finance can reduce how much bank debt the deal needs and close a funding gap, but a lender will look at how the vendor loan ranks against their own debt, its repayment terms, and whether the business can service both facilities together.
What happens if the business underperforms while vendor finance is still owing?
That is the scenario the structure has to be designed for before settlement. The vendor finance terms should state what happens if trading dips: whether repayments pause, reduce, or continue unchanged, and what rights the seller has. Because the bank's facility and the vendor loan draw on the same cash flow, lenders want the ranking and the repayment obligations settled in the documents, not worked out during a downturn. This is a key reason vendor finance is designed into the funding structure at the start rather than bolted on after terms are agreed.
Why would a seller offer vendor finance?
Sellers offer vendor finance to get deals done and to support the price. Leaving part of the price in the business widens the pool of buyers who can fund the purchase, supports the valuation by bridging what a bank will lend, and signals the seller's confidence that the earnings will hold up after the handover. For the buyer, that signal is worth attention in both directions: a seller who offers it believes in the business, and a seller who refuses any part of it on a goodwill-heavy sale is worth asking why.
Get started
Want to talk it through?
Send us a short enquiry. We'll tell you whether it's fundable, how we'd structure it, and which lender we'd take it to. No obligation, and no meeting required to get an answer.
Prefer to talk? Call Rowan on 0483 292 005 or Ari on 0434 929 370.