Resources

Commercial Loans

Before you rush off to the nearest Bank, talk to us.

1. Commercial Mortgages

Similar to home loans, except the securities are commercial properties.

We are now in a position to offer lo-doc commercial mortgages and also ‘asset-lend’ on commercial properties where there is no need to declare an income. Please contact us for details.

We also do commercial loans on some specialised properties such as hotels, motels, retirement homes, and farms. Please contact us on a case by case basis.

The amount of information required depend on the complexity of the deal and the risks associated with it. Generally the more information that are provided, the better the chance of an approval on competitive terms.

1. Overview of the transaction – loan amount, purchase price, purpose and plan
2. Background of applicant, business, history of business, have they done this type of loan before?
3. How will the debt be repaid – existing cash flow or future cash flow or both?
4. Financials for the last 3 years (minimum), cash flow (needed to analyse trends)
5. Directors personal tax returns
6. Interim results
7. Directors/ Partners financial position to support their guarantee
8. Evidence to support any claims in the application
9. Commitment Schedule (Assess loan serviceability)
10. Current Debtors/ Creditors Lists (any factoring used?)
11. Existing loan/ overdraft statements
12. Check that all taxes are paid to date
13. Cash flow projections for next 12 months, 3 years (depending on the project)

We can offer loans for selected Franchises where the loan to value ratio can vary from 40% up to 60% depending on the type of franchise. Only well established franchises are included in the list. As a guide the minimum value for it to be considered is around $250,000.

A Developer must have experience and track record in order to qualify for this loan.

The Developer should have at least the following items before entering a discussion with the Lender:

• Feasibility study
• Cash flow projection net of GST.

Checklist for a Development Loan

• General overview of the development such as number of townhouses, blocks of land and sale prices
• Commencement / Completion dates
• Has Development and Building Approvals (DA approvals) been obtained?
• Overall cost, showing where equity is coming from
• Will interest need to be capitalised?
• Experience of applicant and some details of other projects undertaken including profit margins
• Will the development be staged ie different stages over a period of time?
• Will all of the development be sold or some held?
• What pre-sales is the developer looking at?
• Have any valuations been undertaken?
• What was the site cost?
• Who are the Builders, Quantity Surveyors, Project Manager, Civil Engineer, Marketing Agent, and what are their experience?
• Break up of Hard and Soft Costs (marketing, preparatory cost, commissions, etc)

Factoring is usually suitable where the business has run out of freehold security and requires quicker turnaround of cash. On presentation of their invoices (usually up to 90 days ) payments up to 80% of the amount is made within 48 hours by the Lender. Used wisely, this additional cash flow can be used to fund growth through purchase of stock which produces additional profit or can be used to secure additional supplier discounts.

Funding is usually on an undisclosed basis which means no one other than the client and the lender knows that factoring is being used.

We can arrange finance for the following equipments:

• Aircraft
• Buses & Trucks
• Boats
• Earthmoving Equipment
• Farm Machinery
• Manufacturing Plant
• Specialised medical and dental equipment
• Mining Equipment
• Motor Vehicles
• Printing Equipment

Equipment is owned by the Lender and leased to the user for a set repayment amount over a set term. 100% funding. No equity allowed. Residual Value is based on tax guidelines set at the outset. Whilst the client has no guarantee of ownership the usual case is the lender will offer for sale at the end of the term the equipment at the Residual Value. Repayments are generally tax deductible in full.

Equipment is owned by the Lender and hired to the User for a set period. Can be 100% funding or with part equity contribution. "Balloon payment" can be structured into the deal similar to a lease. Only the depreciation and interest payment is tax deductible. Ownership automatically passes on to the User upon final payment.

A lease where the Lender, not the Borrower, is responsible for the residual value. This is an "off-balance-sheet" item which can have some advantages for a company.

Where the client owns the equipment and wishes to get their money back by selling the item. Only for special case where goods have been imported or for tax reasons. Cannot be used for capital raising. It has a time limit to it, usually within 3 months of purchase.

Where you have a client that has ongoing and numerous equipment finance needs it may be best to set up a pre-approved limit and Master Lease Agreement. This streamlines the process with automatic approval. Similar to a line of credit. Documentation is a one pager.