Secured business finance for SMEs
Our team understand the highs and lows of business
Choosing the right finance option for your business can be tricky. With so many lenders, finding the best loan can be difficult and time-consuming.
Whether you are starting a business or wanting to expand, let us find the ideal solution for you, without committing to complex terms or high-interest rates.
Loans and options
Guiding you through the myriad of options is our specialty
Business overdraft
These facilities have a defined credit limit with interest only charged on the funds drawn, and no set principal repayments. An overdraft can assist with cash flow fluctuations such as seasonal impacts, buying new stock lines, short-term increase in production, or funding to pay an overdue creditor. There are no restrictions on how you utilise these funds.
Business line of credit
This facility has an approved credit limit. The Line of Credit allows you to borrow and repay, and borrow again. Interest is charged on the loan balance, and balance must be kept under the limit. Funds can be utilised as you wish and payments are also flexible.
Working capital loans
These loans have a set loan term, generally as long as your lease terms. Interest rates are based on the loan term, security offered and risk. The interest rate can be fixed, variable or a mixture of both.
These loans are generally utilised for buying or building a commercial premise, refinancing existing business debt, purchasing a franchise or long-term working capital
How is your application assessed and what are banks looking for?
Behind the scenes, all bank assessment teams have guidelines, ratios and formulas to assess your application and required paperwork.
Banks consider the 4 'C's of Credit.
These are briefly explained below:
Character
Character refers to your credit track record for repaying debts. This information is extracted from credit reports such as Equifax and Veda. With Comprehensive Credit Reporting (CCR) the banks can obtain an up-to-date report which details a complete picture of your credit profile. Most banks have a minimum credit score requirement, and if this is not achieved, the loan will likely be declined.
Capacity
Capacity measures your ability to repay the loan by comparing future and current debt obligations against income. This is referred to as ‘Debt to Income Ratio’. The lower the debt to income ratio the better. Banks prefer the DTI to be less than 40%.
E.g. Debt commitments of $18,667 a month, with an average gross monthly income of $68,667 = DTI of 27.2%
Capital
This is the amount of ‘hurt money’ you are willing to invest. Whether it be cash or collateral, this is your commitment to the success of your business. Each lender will apply their own Loan to Value ratio (LVR). An LVR is calculated by dividing the amount of your loan into the value of the security. Generally, banks like to have an LVR under 80%. However, this is dependent upon the loan purpose.
E.g. Security of a residential property valued at $800,000, loan requested $500,000 then the LVR would be 62.5%.
Conditions
Conditions of the loan refers to the loan purpose. This is basically how you intend to use the funds. Banks are more likely to approve loans for a specific purpose, than to provide funds that can be utilised in any way. Other factors to be considered are interest rates, amount of the loan, the term and how the funds will increase profitability or advantage the business. Additionally, banks will consider conditions that are outside of the borrower’s control, such as the state of the economy, legislative changes and effects of Covid-19.
Qualification and documentation
There is a skill to compiling a successful application, lucky for you, we know our stuff.
It is imperative that we get to know your business thoroughly. The more understanding and knowledge we have of your business the more we can help. A well-presented application is the key, this is where we excel.
So let’s make it happen! All you need is...
- An ABN for 24 months and GST registered.
- Up to date Company Tax returns and Financials
- Bricks and mortar with enough equity.
- ATO Tax obligations up to date.
- Prepared business plan and cash flow forecasts.
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Why Us?
Assisting you is a privilege, a privilege we don’t take lightly
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