Essential Guide to Financing Your Business Acquisition and Expansion

Every ambitious business owner knows the importance of growth. Whether you're looking to acquire a new company or expand your existing operations, having a clear financial strategy is essential. Securing a business loan is a critical step in this journey. Fortunately, there are many options available in New Zealand to help you achieve your goals. This guide will walk you through the process, providing insights and actionable advice to help you grow your business with confidence.

Learn more about our solutions here.

Understanding Business Acquisition and Expansion Financing

While the terms are sometimes used interchangeably, it is helpful to understand the difference between these two types of finance.

Business acquisition financing is the capital you secure to purchase an existing company or its assets. Its focus is on facilitating a change in ownership.

Business expansion financing provides the capital needed for an established business to grow. Common goals include increasing market share, scaling operations, or purchasing new assets to boost capacity. This kind of business financing helps you invest in your future.

To discover more about how your existing business assets can provide a source of funding, check out this article.

Types of Business Loans Available in New Zealand

Businesses seeking capital for acquisition or expansion have several avenues to explore.

Business Bank Loan Options

When you get a business loan from a traditional bank, the process typically involves a detailed review of your business plan, financial history, and assets. Banks usually have competitive interest rates and structured repayment terms.

Small Business Loans

A common question we hear is, "Can small businesses in New Zealand get loans to buy another business?" The answer is yes. Many lenders recognise the potential of small and medium-sized enterprises (SMEs). There are a range of tailored small business loans available to help you purchase a competitor, acquire a new franchise, or merge with a partner.

Private and Non-bank Lenders

In addition to traditional banks, a growing number of private and non-bank lenders offer specialised financing. These lenders often have more flexible criteria and can provide bespoke solutions. We work as a bridge between borrowers and these different lenders, helping you find the right fit for your needs.

Find out more about our solutions here.

Acquisition Financing: What You Need to Know

While all business loans provide capital, acquisition funding is a specialised type of finance. Lenders in this space focus on the value and potential of the business you are buying, not just your own.

A key question is, "What do lenders look for when financing a business acquisition?" They are interested in several factors, including the target company’s financial health, its market position, and the strength of the combined entity after the transaction.

There is a range of specialised acquisition financing lenders who understand these specific needs. This can be a more effective route than a general business loan.

Many small businesses choose to purchase a franchise or buy out a partner. This small business acquisition financing can be an effective strategy for growth. To see a real-world example, you can read the success story of Absolute Process Solutions.

"Do I need a deposit to get acquisition funding?" is a common question. Yes, most lenders require some form of equity contribution from you. The specific amount varies. When it comes to using your existing assets, "Can I use existing business assets as security?" The answer is yes. Asset-based loans are a very common option. You can learn more about this approach in this article.

How to Prepare for Business Financing

Preparing for business financing is crucial to a successful outcome. The more organised you are, the faster and smoother the process.

Lenders will typically ask for a range of financial documents, including your business’s financial statements, tax returns, and a detailed business plan with cash flow forecasts. The question of "How long does the financing process take?" often depends on how well you prepare. Being organised and having all your information ready can significantly speed things up.

Common Challenges and How to Overcome Them

It's not uncommon for businesses to face roadblocks in the funding process, from a declined bank loan to insufficient collateral or delayed approvals. Many ask if it's easier to get financing through a bank or a financial advisor. While both have advantages, a financial advisor works for you, giving you access to a wide range of lenders and solutions. This can be particularly helpful when navigating complex scenarios.

At Finance Link, we help you manage these challenges. We understand the nuances of the New Zealand market and can help you create a compelling proposal that highlights your business’s strengths and mitigates any potential concerns.

Contact us to start a conversation about your business needs.

From Challenge to Success: Our Partners' Stories

Seeing a strategy in action can provide a lot of confidence. The Absolute Process Solutions success story is a great example of a business overcoming a funding roadblock to achieve a remarkable outcome.

When they set out to expand, the business faced a common challenge. Their primary bank was hesitant to provide a loan due to an incomplete property that was awaiting council sign-off. This is a familiar situation for many business owners who hit a wall with traditional lending criteria. Instead of focusing on rigid banking policies, we took a different approach and looked at the bigger picture, assessing the business’s potential, financial health, and long-term strategy.

By structuring a flexible funding solution, Absolute Process Solutions didn't just get their expansion back on track, they thrived. With the right funding in place, their revenue grew by 30% in just one year. This shows the power of finding a financial partner who understands your business, not just your problem.

How Finance Link Can Help

We understand that securing a business loan is a significant decision. We’re here to simplify the process and act as your guiding partner. We work with an extensive network of traditional banks and private lenders, giving you access to a wide range of lending options.

To address the question of "How do I start the process?" you can contact us for a free, no-obligation initial consultation. We'll listen to your goals, assess your unique situation, and connect you with the right lenders to find a solution that works for you. We emphasise flexibility, speed, and a deep understanding of the New Zealand business market. Contact us for tailored support.