Commercial Loans
In another FinancialPlus, we’re experts at getting the right finance to keep your business running smoothly and profitably. We can also help if you’re starting a new business or franchise from scratch. So what are your business loan options?
Commercial property loans
So you want to invest in a commercial property or you want to buy one to run your business from. No worries. We have that covered too. Whilst they generally need a 30-40% deposit there are often options such as borrowing this deposit from the equity in your home. These can even be done in a Self Managed Super fund as well.
Chattel mortgage
A chattel mortgage is an excellent commercial lending product that allows you to take ownership of the goods (or chattels as the name suggests) the moment you buy them. One of the best things about this kind of loan is that there are tax advantages that you should always confirm with your tax advisor. You can usually claim the interest component back as a tax deduction. You can also claim on equipment depreciation and you can claim back the GST component. You have the option of a balloon or residual amount to be paid at the end of the finance period. It’s not for everyone, but if you want to keep repayments as low as possible over the term of the loan, a residual isn’t a bad idea. A big FinancialPlus is that we can work out the best combination for you during and at the end of the loan.
What equipment can I get a loan for?
You can get a chattel mortgage to purchase all kinds of business equipment, but here’s a general guide:
- Passenger cars for personal and business use;
- Light and heavy commercial vehicles;
- Earthmoving and construction equipment;
- Manufacturing and industrial plant and machinery;
- Printing presses and graphic technology;
- New computers and office equipment;
- Medical and Dental Equipment;
- Agricultural equipment and machinery;
- Above ground mining vehicles and equipment
This is far from an exhaustive list, but it might get you thinking about the kind of equipment you can buy with the right loan.
Business loan
As the name suggests a business loan is a loan, often a fairly substantial one, for buying … a business! Buying a new business is an exciting time in your life, so it’s important to keep the stress in check. And that means getting a loan that doesn’t stretch your business from the start. We can help you find a great lender with a great interest rate. Unfortunately, commercial loans usually come with higher interest rates and fees than home loans. Generally, you can expect a business loan to be over about 10 to 15 years with around 5 years’ interest only. Interest can be either fixed or variable and most banks will require substantial security, such as a property mortgage. Business loans can be in your name or the name of the company.
Franchise loans
Buying a franchise in an already successful chain is an attractive proposition for any enterprising business person, and banks can get pretty excited about it too! How excited they get depends on the history and reputation of the franchise, so if it’s a McDonald’s store, you’re on a safe bet! As a rule they’ll lend around 60% of the franchise cost. The rest we can arrange through other means such as a mortgage over your home.
Overdraft
When managed correctly an overdraft can be a very handy way to keep cash flowing when things get a bit tight. They allow you to overdraw your business working account up to a pre-approved amount. If that amount is relatively small, you might be able to get approval without offering security. If large, banks will require security such as a mortgage over your house.
Debtor finance
Here’s an interesting one to finish. Ever heard of debtor finance? Say you have a huge stack of outstanding, unpaid invoices. You can give those to a bank as security and they will lend you 60% of the invoice total, a nice way to keep the cash flowing before customers actually pay you. The bank will then pay the remaining 40% once the invoices have been paid.
If you’d like to chat about your business lending options, call us on 07 5564 5903 or make an enquiry.
