BUSINESS LOANS

PURPOSE:

  • To take over an existing business 

  • To provide additional working capital 

  • To provide for major capital works or an expansion project 

  • To take-over Trade Debtors – Inventory Lending 

  • To provide start-up funds and on-going working capital.

 

With business, the list of why the new or extra finance is required is innumerable.

Do not expect to call on a Credit Advisor seeking finance with information that could be written on the back of a postage stamp, then wonder why there is no movement.

It is highly critical in Australia for business owners to exercise business management skills even if it is a single operator or a husband and wife. There are about fourteen different hats to be worn.

  • Consider adopting an electronic accounting software programme designed for your industry and in consultation with your Accountant; and, 

  • Consider undertaking courses on selling, marketing, purchasing, industrial relations, bookkeeping, debtor collection, reading financial reports and ratios, internal audit controls, occupation health and safety, and taxation legislation. If not, then surround your self with experts from these fields. 

 

It is imperative that you have a business plan covering your short-term, medium and long-term strategies.

Your Business Plan should include:

Executive Summary

Vision and Mission Statements.

The Business

The name of the business, its location, operating hours, image and brand, industry context, market description, ownership and qualifications, and legal structure.

Marketing Plan

Marketing Plan Summary, Marketing strategy and Strengths Weaknesses Opportunities and Threats (SWOT) Analysis. 

Operational Plan

About your people and operations. 

Financial Plan– highly critical section to a lender and potential purchaser

Financial Plan Summary, Cash Flow budget/projections, Statements of Financial Performance and Position. (A Credit Advisor will require the latest three years Accountant prepared and submitted Taxation Returns).

 

Other considerations are – what strategies are in place should the main or key management person die or be seriously ill, can the business survive or perform?

Does the business rely on one or two outlets for its sales or suppliers? If either go out of business what fall-back strategy or alternatives has management in place?

Is there a succession plan in place?

Business Loans can be classified as Full Doc (all financials and taxation returns are available) OR Low or Lo Doc loans (where other documents are provided to determine income).

Products can be Business Credit Card, Overdraft, Term Loan, Bank Bills and Documentary Letters of Credits. There are also: various types of Leasing, Commercial Hire Purchase and Floor Limits.

Mortgage Security can be: residential, a commercial premises, a floating charge over a lease and/or business contents.

Pricing is some times determined by:

 

The type of mortgage security such as putting up a residential property which can command almost a home loan rate;

Fees and charges are determined by the legal structure of the business and the complexity of the proposal;

The strength and the profitability to the lender of the business connection can also determine discounts or margins to be applied.

Glenn N Gough, DipFMBM, MFAA (CA), MIPA, C.dec, is a credit representative 390993 of BLSSA Pty Ltd, ACN 117 651 760 (Australian Licence 391237)

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