Requirements for business finance in today’s climate has tightened.
Key questions to ask when seeking Business Finance include :-
- Are all taxes, superannuation and other statutory payments paid to date?
- Have financial accounts, including balance sheets and profit-and-loss been finalized for the previous year? Lenders now require a minimum of 2 years of recent financials to assess any business funding.
- Are there any interim Management Accounts?
- What is the purpose of the finance? i.e. working capital, capital expenditure, debt consolidation.
An experienced finance broker will analyse the financials and your requirements and work closely with your accountants to structure the funds required. Importantly, the funds should match the needs.
For Commercial Property Finance, some key questions to consider :-
- What is the rental income?
- What are the terms of the current or proposed lease?
- Is there any need for repairs or major works?
- What is the entity of the purchaser, i.e. Company, Individual, Trust or SMSF?
Whilst major banks are offering competitive pricing for commercial property loans, they often wish to manage the entire business relationship themselves.
This could be an advantage for some clients. However, there are specialist Commercial Property Financiers who can assess the transaction on its merits and which do not require an ongoing banking relationship.
When seeking a Commercial Property Loan you should be aware of the term “notional term” and ‘standard term’. Some banks use the 15-year standard term to calculate loan repayments, while committing to an actual term of 1 to 5 years. In doing so, the loan is amortised over a 15-year term, yet the commitment is only for 5 years. On expiry of the 5 years, you have to re-apply or re-finance. Some lenders do this as the cost of their capital is lower for shorter commitments and so they can deliver a lower “headline” rate of interest.
Specialist Commercial Lenders can offer loan terms from 15 to 30 years on commercial property and other various loan products to suit your requirements.
If you need guidance to secure a business or commercial property loan today please talk to Paul to find out what your best options are and how we can assist you to achieve your business and financial goal(s).
Tags: business finance