startup-costs, australiaI am looking at purchasing a business in Australia. I have estimated that I will need a loan of $150,000 to purchase the business and to have some capital for growth.
I am working full time however, to make the business work, I will need to quit my job and work full time in the new business. Will Australian banks consider the revenue of the established business which I am purchasing when they loan to me? Or will the serviceability of my loan be calculated from my current income?
Please presume that I have sufficient funds for a loan deposit.
I think this question, is independent from the point of you living in Australia. Maybe it is, but that would be a cultural (entrepreneurial culture) or economical question (base rate, interest rates etc.).
Before talking about bank loans, have you thought about things like goverment loans: http://www.australiangovernmentgrants.org/qa/qa.php?id=federal-entrepreneur-government-loans (Please be aware. Maybe that is not an official offer... it was just googled)
Back to bank loans
As you already mentioned: To receive a bank loan, you need a reason and securities, which you can offer the bank.
In your case, the reason is take over a business, with all its assets and liabilities. Those information need to be reorganized and presented. Answer the question of what you are buying.
But in terms of security, it is a bit more complex.
If the business you want to buy already exists for a few years and you can offer your banker some nice numbers and reasonable arguments, why those numbers will get even better, then there will be no problem. You have to convince them, that the risk to give a loan is low and you are the right person for this venture.
This is normally done by a business plan, and Yes even when you just take over a business, they will ask you for something like that.
Another thing they want you to do, is to invest into your own business. I can't tell you how much that will be, but consider at least 25%-33% of the value (more = better) as minimum capital requirement.
If you want more information, specifically about interest rates etc., you may should see the banker of your choice and discuss that topic further. They will be very glad to answer your question here by their own ;)
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