ETA finance is the funding a searcher assembles to buy an existing profitable business under the Entrepreneurship Through Acquisition (ETA) model, rather than starting a company from scratch. It is typically a mix of a bank or non-bank loan sized against the target's cash flow, vendor finance from the seller, sometimes investor or equity capital, and the searcher's own contribution. In Australia this stack is arranged deal by deal, matched to the lender tier that suits the searcher and the business being acquired.
We spell the acronym out deliberately. ETA also stands for Electronic Travel Authority, an Australian visa product, and the two get mixed up in search results. This page is about Entrepreneurship Through Acquisition: the ownership pathway where you acquire an existing business rather than build one.
Under the ETA model, a searcher (individually, or backed by a small investor group) raises capital to search for a business, then acquires and operates it once a target is found. The model started in US business schools and has spread globally. In Australia it remains a smaller pool of deal activity than the US market, but it is a growing pathway to ownership, and lenders across all three tiers now see enough ETA deal flow to have working views on how to fund them.
What makes ETA financing distinct from a general business acquisition loan is the searcher's position: often no direct industry background, sometimes no prior operating experience, and a funding need that has to be built from several sources rather than a single facility. For the general mechanics of how acquisition lending works in Australia, including deposit requirements and lender assessment criteria that apply to any buyer type, see our pillar guide on business acquisition finance. This page focuses on what is different when the buyer is a searcher.
What is ETA finance and how does the model work
Entrepreneurship Through Acquisition is an ownership pathway: instead of starting a business, the searcher acquires one that already exists, already has customers, and already has a trading history. That trading history is the foundation lenders assess. A three to five year run of financials on a real operating business gives a credit team something concrete to underwrite, which is a fundamentally different conversation from a startup loan.
The searcher's job across the model has two phases. First, the search: finding a business that fits the criteria, usually an SME with established cash flow and an owner-operator looking to retire or exit. Second, the acquisition and operation: once a target is found, assembling the capital to buy it and then running it. FGO's role sits in the second phase, arranging the acquisition finance once a target is identified.
Typical ETA targets in Australia are profitable SMEs in services, distribution, trades, or light industrial, where an owner-operator is exiting and the business can run without them day to day. The exact scale of the Australian ETA market is not something we quantify here. What we see directly is steady and growing deal flow across searchers reaching out for acquisition finance, and lenders in all three tiers willing to fund the right deal.
Searcher archetypes
Not every searcher looks the same to a lender. The funding conversation, and the mix of capital available, differs by archetype.
The self-funded searcher
Searching on their own capital and time, without an investor group backing the search phase. Once a target is found, the acquisition is typically funded through a bank or non-bank loan against the target's cash flow, vendor finance, and the searcher's own equity, often drawn from savings or home equity. Lenders look closely at the searcher's own financial position because there is no investor syndicate standing behind the deal.
The traditional search fund
Backed by a group of investors from the outset, who fund the search phase and typically have a right to co-invest in the acquisition itself. When a target is found, the funding stack often layers acquisition debt underneath investor equity, rather than the searcher's own cash. Lenders assess the deal on the target's cash flow as usual, but the presence of an investor group and its governance structure is part of the credit picture.
The independent sponsor
Sourcing a specific deal first, then raising equity capital for that one acquisition rather than for an open-ended search. Funding is typically assembled once the target is identified: a bank or non-bank loan against the business, equity raised from a small group of co-investors, and sometimes vendor finance. Lenders see a defined transaction with named backers rather than an ongoing search mandate.
The corporate escapee
A first-time acquirer moving out of a corporate, consulting, or banking career to buy and run a business directly, usually without a formal search fund structure around them. Funding typically leans more heavily on the searcher's own equity (often home equity) alongside a bank or non-bank loan and vendor finance. Lenders weigh transferable experience and the transition plan more heavily, since there is no investor group vouching for the deal.
The archetype shapes the funding conversation, not the outcome. What every archetype has in common is that the credit decision rests on the target business's cash flow and the strength of the transition plan, not on the searcher's personal income history the way a home loan would be assessed.
The capital stack: how ETA financing actually works
An ETA acquisition is rarely funded from one source. Searchers typically assemble a stack of two to four layers, matched to the target business, the archetype above, and the searcher's own position.
| Layer | What it is | How it shows up in an ETA deal |
|---|---|---|
| Bank or non-bank loan | Term debt secured against the target business, sized against its cash flow. | The largest single layer in most ETA deals. Repaid from the cash flow of the acquired business, tested through a debt service coverage ratio at underwriting. |
| Vendor finance | A portion of the purchase price the seller leaves in the business, repaid over time. | Common in ETA deals because it reduces the searcher's day-one cash need and keeps the seller commercially aligned through the handover, which lenders read as a positive signal. |
| Investor or equity capital | Capital from a search fund's backers or an independent sponsor's co-investors. | Present where the archetype involves outside investors (the traditional search fund or the independent sponsor). Sits alongside, not instead of, the acquisition loan. |
| Searcher's own contribution | Cash the searcher puts in personally, sometimes drawn from home equity. | Present in every archetype in some form. Sets the floor the rest of the structure is built around, and its size varies a lot depending on whether the searcher has investor backing. |
There is no fixed formula for how these layers combine. A self-funded searcher's stack looks different from a traditional search fund's stack, even on a similarly sized target. The right combination depends on the business, the searcher's own position, the security available, and which lender tier is most suited to the specific deal. These are indicative descriptions of the layers we see, not a template to fill in.
How much can a searcher borrow
Borrowing capacity in an ETA deal is driven mainly by the target business's cash flow, not by the searcher's personal income or the headline purchase price. Lenders size the loan so the business can comfortably service the debt, tested through a debt service coverage ratio, then weigh the available security, the searcher's equity contribution, and any vendor finance in the structure. Cash-flow-led lending of this kind is available without traditional asset security, typically at a higher cost of funds than a fully secured facility.
The searcher's own income and personal balance sheet still matter, particularly for the self-funded and corporate-escapee archetypes where there is no investor group behind the deal, but they are one input into the credit decision rather than the primary driver. For a first-pass estimate before a full deal review, use our business acquisition calculator. It gives an indicative borrowing range based on the target's earnings; the actual number gets confirmed once we run the deal properly with a lender.
The ETA financing journey
The path from finding a target to settling on it follows a consistent shape, whichever searcher archetype applies. Where FGO sits across the journey, and which lender tier we approach, depends on the deal.
Letter of intent
A target is identified and heads of agreement or a letter of intent is signed with the seller. We run an initial deal review at this stage to flag credit issues before serious due diligence spend.
Due diligence
Financial, commercial, and legal due diligence on the target runs in parallel with our initial read on which lender tier, Big 4, challenger, or private credit, is most suited to the deal.
Indicative terms
We approach the two or three lenders most likely to fund the deal for indicative pricing and structure, giving the searcher a clear read before the full application goes in.
Credit approval to settlement
Once terms are confirmed, we prepare the full credit submission, manage conditions precedent, and coordinate between lender, solicitor, accountant, and vendor through to settlement.
FGO works across Big 4 banks, challenger banks with dedicated SME teams, and private credit and non-bank lenders. Each tier has a different appetite for cash flow versus security-backed lending, and a different cost of funds. Matching a searcher's specific deal to the right tier on the first attempt is most of the work of getting it funded, and it is the conversation we have on the initial call.
Frequently Asked Questions
What is ETA finance?
ETA finance is the funding a searcher assembles to acquire an existing profitable business under the Entrepreneurship Through Acquisition model, rather than starting a company from scratch. It typically blends a bank or non-bank loan sized against the target's cash flow, vendor finance from the seller, sometimes investor or equity capital, and the searcher's own contribution. In Australia, this stack is arranged deal by deal, matched to whichever lender tier suits the searcher's profile and the target business.
Is ETA / search fund acquisition finance available in Australia?
Yes. Entrepreneurship Through Acquisition is a smaller but growing model in Australia compared with the United States, and lenders across Big 4 banks, challenger banks, and private credit will fund searcher acquisitions where the target has established cash flow. The mechanics differ from a startup loan: the credit decision is grounded in the target business's own trading history, not the searcher's track record alone.
Do banks fund search fund acquisitions?
Banks and non-bank lenders fund search fund acquisitions where the target business has a clean trading history and the deal is structured well. The lender is lending against the cash flow of the business being acquired, tested through a debt service coverage ratio, rather than against the searcher personally. A credible transition plan, an engaged seller, and a sensible funding mix all strengthen the case. Which lender tier is the right fit depends on the specific deal.
What is the difference between self-funded search and a search fund for financing?
A self-funded searcher typically finances the acquisition using their own capital plus a bank or non-bank loan and vendor finance, with no investor group behind the search itself. A traditional search fund is backed by investors from the outset, who fund the search phase and then typically co-invest alongside acquisition debt when a deal is found. The financing conversation differs: a self-funded searcher's own balance sheet and experience carry more weight, while a search fund brings investor capital and governance into the funding mix.
Do I need industry experience to buy a business through ETA?
Direct industry experience helps but is not a strict requirement. Lenders weigh transferable experience alongside a credible transition plan, and first-time searchers regularly get funded where the plan is sound and the target's cash flow supports the debt. Our guide on whether a first-time searcher with no industry experience can get funded works through exactly what lenders look for.
How much can a searcher borrow to acquire a business?
Borrowing capacity for an ETA acquisition is driven mainly by the target business's cash flow, tested through a debt service coverage ratio, rather than a fixed multiple of the searcher's own income. Lenders also weigh available security, the searcher's equity contribution, and any vendor finance in the structure. The business acquisition calculator gives a first-pass estimate before a full deal review confirms the number.
What is the ETA financing journey from offer to settlement?
A typical ETA financing journey runs from a signed letter of intent or heads of agreement, through due diligence and indicative lender terms, to credit approval and settlement. FGO gets involved from the initial deal review, runs indicative terms across the lender tiers most likely to fund the deal, prepares the credit submission once the deal is firm, and manages conditions through to settlement.