Finance question
Can I finance a business and its freehold together?
Yes. Buying the business and the land and buildings it trades from in one deal is usually easier to fund than the business alone, because the property gives the lender real security under the goodwill. Freehold caravan parks and childcare centres indicatively fund at around 70% of the going concern valuation, against about half for a leasehold, subject to lender assessment.
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The short answer
The land under the business is what makes it bankable
A business sold with its freehold is called a freehold going concern: you buy the trading business, the licence or contracts that go with it, and the land and buildings in one contract. A leasehold sale gives you the business and the remaining lease only. To a lender the difference is security. Goodwill on its own can disappear if trade drops, so leasehold buyers are usually asked for half or more of the price in cash or other equity. A freehold puts property behind the loan, which is why so many regional businesses, from licensed post offices to motels and caravan parks, are advertised as freehold packages.
How much a lender will advance depends on the type of business, and the spread is wider than most buyers expect. From the market data in our own guides: caravan park freeholds indicatively fund at around 70% of the going concern valuation, while leasehold parks need about half down (caravan park guide). Childcare freeholds fund to around 70% and leaseholds at 40 to 60% (childcare guide). Pubs run around 65% where gaming is in place and nearer half without it (pub guide). Banks treat service stations as specialised security at 50 to 60%, with specialist lenders to about 70% (service station guide).
The deal is normally structured as a commercial property loan over the land and buildings with the business riding on top, sometimes as one facility and sometimes split so the property portion carries a lower rate. Equipment that comes with the sale, such as kitchen gear, vehicles or a fleet of cabins, can be financed separately against the assets themselves. If your deposit is tied up in your home or another property, that equity can be used to close the gap. Ventas is a broker across 40+ lenders, not a single bank, and there is no upfront fee to you; the lender pays us on settlement.
Do you qualify?
What a lender looks at on a freehold business purchase.
Trading history
Two to three years of the vendor's financials and BAS that reconcile.
A going concern valuation
A lender-approved valuer prices the property and the trade together.
Deposit or equity
Savings, or equity in your home or another property, plus duty and costs.
Relevant experience
Lenders weigh whether you or your manager have run this kind of business.
Why freehold deals fund better
Property is security
The land and buildings hold value even in a soft trading year.
One settlement
Business, licence and property transfer on the same day.
Equity can be the deposit
Home or investment property equity can cover the gap.
A worked example
A couple buys a regional caravan park freehold going concern valued at $2.4 million. At around 70% of the valuation the lender advances about $1.68 million, leaving roughly $720,000 plus stamp duty and costs. They put in $400,000 of savings and cover the rest with a loan secured on their home, so the park, the business and the residence settle together. Illustrative only.
Common questions
Frequently asked questions
Is a freehold business easier to finance than a leasehold?
Usually yes. The land and buildings give the lender security, so freehold going concerns often fund at around 65 to 70% of the valuation, while leasehold businesses are typically asked for half or more of the price as a deposit.
How much deposit do I need to buy a business with its freehold?
Plan on roughly 30% of the going concern valuation plus stamp duty and costs for many freehold businesses, and more for specialised property such as service stations or pubs without gaming. Equity in other property can count toward it.
Can I buy the business now and the freehold later?
Yes. Many owners buy the leasehold first and buy the freehold when the landlord sells. The later purchase is assessed as a commercial property loan, and the business you already run is the tenant the lender looks at.
Is GST charged on a freehold business sale?
A sale of a going concern can be GST-free when the ATO conditions are met, which affects how much cash you need at settlement. Confirm it with your accountant before you sign.