Manufacturer Family Succession: The Factory Sale Loan Read
Manufacturer Factory Sale Finance 2026 | Switchboard Finance
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Factory Sale · Family Succession · Commercial Property
Manufacturer Family Succession, The Factory Sale Loan Read
A manufacturer family factory sale is two transactions on the bank's read, the property transfer and the going concern. The loan file weighs both at the same time, and the small business CGT concession claim sits in the advisor notes alongside.
Quick Answer
A manufacturer family factory sale is two transactions on the bank's read, the property transfer and the going concern. Lenders weigh independent market value, servicing across both entities and any vendor finance fragment against the same commercial property loan file.
The factory sale is two transactions on the bank's read
The factory sale is two transactions, not one, when a manufacturer hands the family business down. The property transfer sits on the commercial property loan file, the going concern sale sits on the operating entity, and the bank reads both at the same time. Treating them as a single number on a contract is the single most common reason a family-transfer loan file stalls in credit.
From the underwriter's seat, the property side is a security and serviceability question, and the going concern side is a continuity-of-trading question. The two questions feed the same answer on whether the buying generation can hold the asset and the trade on day one. The equity buy-out version of this deal reads slightly differently because the property does not move, but the lender's two-track structure is the same.
What changes the property file from a generic commercial purchase into a family transfer is the documentation around price. The lender will engage their own valuer regardless of the contract number, and the small business CGT concession claim sits in the accountant's notes, not on the loan file itself. The credit desk wants both lines of evidence on the same folder before it issues a formal approval.
What the bank weighs first on the property transfer
What the bank weighs first on the property transfer is whether the price is documented at independent market value with the vendor finance fragment sized cleanly. On the files that pass first time, the deal reads like a standard commercial purchase that happens to be between related parties, and the files that fail read like a family handshake that has been retro-fitted to a contract.
What passes credit first time
- Independent valuation engaged by the lender, contract price sits at or below valuation
- Vendor finance fragment, typical 20 to 40 percent of purchase price, varies by lender, sized so the buyer services the residual on day one
- Small business CGT concession eligibility signed off by the accountant, advisor letter on file
- Going concern sale treatment confirmed in writing between the two entities, GST line resolved
- State stamp duty calculated against the valuation, state-rate dependent, paid at settlement
- Director's guarantee redeployed across the buying generation, BAS-validated trading income supporting the residual
What stalls in credit
- Contract price set inside the family with no independent valuation backing it
- Vendor finance written as a side letter, not registered as a second security on the title
- Small business CGT concession assumed rather than confirmed by an accountant
- Going concern treatment claimed verbally with no written agreement before settlement
- Stamp duty calculated against contract price below market, state revenue office reassessment risk
- Servicing test that relies on outgoing-generation income that disappears at settlement
The pass-list pattern is the lender being able to read the deal in 20 minutes. The stall pattern is the lender having to chase three different parties for the same number, which is where files lose two weeks and then re-price.
Small business CGT concessions and going concern treatment
Small business CGT concessions are explicitly retained in the 2026-27 Budget, and the going concern sale treatment shapes the GST line item that flows through the same file. Both sit in the accountant's territory rather than the broker's, but both materially change the cash position at settlement that the lender then services against. According to the ATO guidance on small business CGT concessions, the 15-year exemption, 50 percent active asset reduction, retirement exemption and restructure rollover all remain available subject to eligibility, illustrative thresholds vary by entity.
The general 50 percent CGT discount reform announced in the Budget (cost-base indexation from 1 July 2027 for residential investors) is a separate measure and does not flow through the small business concessions on this transaction. That is worth flagging in the accountant conversation because the two changes are easy to conflate. The post-Budget finance map for manufacturers walks the broader timeline.
Going concern treatment removes the GST line from settlement where the conditions of the GST Act are met, including continuity of operation up to settlement and a written agreement between the parties. On a family transfer where the operating manufacturer keeps running through settlement, the going concern path is usually available, depends on advisor sign-off. The lender reads the resolved GST line on the same file as the cashflow at settlement, so a GST surprise late in the file is a re-price event.
Document teardown, what the loan file actually contains
The document teardown for a family factory sale runs across three folders that the lender reads as one. The property folder, the going concern folder and the personal guarantee folder. Each folder answers a different question for credit, and the order they arrive in shapes how fast the file moves.
The property folder holds the contract, the independent valuation, the stamp duty calculation and the title with any vendor finance second registered against it. The going concern folder holds the sale agreement, the GST written agreement, the customer and supplier continuity letters, and the accountant's eligibility letter on small business CGT concessions. Lease-doc treatment sits adjacent if the property continues to lease back to the operating entity post-transfer, which is the common pattern on a single-site manufacturer.
The personal guarantee folder holds the buying generation's tax returns or BAS-validated trading income, the DTI read across any concurrent director facilities, and the director's guarantee structure. The manufacturer property stack sits underneath if the buying generation already holds equipment finance or a separate property line. The underlying business loan definition sets the language the lender uses to read the file, particularly on what counts as primary security and what counts as supporting.
A practitioner pattern: open the broker conversation at the same time as the accountant conversation, not after. The two folders that the lender reads in parallel come together cleanly when broker and accountant are working off the same valuation number from the start, and they fall apart when the valuation arrives last. The manufacturer succession and acquisition finance map walks the broader sequencing.
A manufacturer family factory sale lives as two transactions on the bank's read, the property transfer and the going concern, even when the family thinks of it as one event. The credit desk wants independent market value, a sized vendor finance fragment, a written going concern agreement, a small business CGT concession letter from the accountant, and a clean director's guarantee redeploy across the buying generation. Get those five items on the same folder and the file reads in 20 minutes. Leave one open and it stalls for two weeks and re-prices.
Key takeaway: build the loan file around the independent valuation, not the family-agreed number, and the rest of the documents fall into place.Frequently Asked Questions
The bank values a family transfer of a factory at independent market value, evidenced by a valuer the lender will engage themselves. A sale price agreed between family members carries little weight on the loan file unless an independent valuation backs it. Where the contract price sits below market, lenders typically lend against the lower of contract or valuation, indicative and varies by lender. The servicing test then runs against the BAS-validated trading income on the operating entity.
An independent valuer is effectively required on a family factory transfer because the lender engages their own valuer regardless of any number agreed inside the family. The independent valuation drives the LVR calculation and the property security position, and the loan file is built around that number, not the family agreement. A lower-than-market family price can also raise stamp duty questions with the state revenue office, so an independent valuation also supports the state-rate dependent duty calculation. See the manufacturer property stack guide for how the valuation flows into the stack.
Small business CGT concessions remain available after the 2026-27 Budget, with the 15-year exemption, 50 percent active asset reduction, retirement exemption and restructure rollover all retained. The Budget reformed the general 50 percent CGT discount for residential investors from 1 July 2027, which is a separate measure. Eligibility for the small business concessions depends on entity, turnover thresholds and advisor sign-off, illustrative thresholds vary by entity. The post-Budget manufacturer finance map walks the wider Budget timeline.
Going concern sale treatment is a GST treatment under which the sale of the enterprise is GST-free where the conditions of the GST Act are met. On a manufacturer family transfer that includes the operating business, going concern treatment removes the GST line item from the cashflow at settlement, which the lender reads on the same file as the property security. The treatment depends on advisor sign-off and a written agreement between parties, and it sits alongside the lease-doc commercial property loan path if the operating entity keeps leasing the site post-transfer.
Vendor finance on a manufacturer family transfer typically runs in the range of 20 to 40 percent of purchase price, varies by lender. The lender wants the residual sized so the buying generation can service it on day one alongside the bank facility, with the servicing test running across both. Vendor finance fragments outside that range can be done but usually require a stronger property security position or a director's guarantee across both generations.
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