Term Loans

 

Terms Loans as the name suggests is a form of financing, where the repayment of the loan is amortised over a specific numbers of years, not unlike a home loan.

This form of financing is available to assist in the funding of business growth or expansion, consolidation of business debts, capital and equipment purchases as well as the purchasing or development of commercial property for owner occupation or investment; essentially any worthwhile business purpose.

A term loan facility offers the flexibility of fixed or variable interest rates, with a choice of repayment options to cater for your businesses cash flow requirements.

 

In the past, most Banks/financiers only allowed the repayment of term loans for periods of between 7 to 10 years. Maximum lending margins are generally assessed at 70% on the valuation of a commercial property and 80% on a residential property. There are a few financiers from our panel of lenders who will consider lending up to 80% on commercial properties, however restrictions may apply.

 

In recent years, the restrictive loan terms have been removed/readdressed with some financiers now providing terms as follows:

• 20 years secured by non-specialised commercial properties

• 25 years secured by residential / rural properties

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Some financiers from our panel of lenders will allow a period of interest only repayments within the overall loan terms, which is ideal to assist reduce repayments.

 

By structuring your loan over a longer term, a business can keep its loan repayments lower and reduce pressure on cash flow. This can be especially advantageous when considering a similar loan written through another lender that may have a maximum loan term of 10 years.

 

 

 

 

Line Of Credit

Line of Credit facilities for businesses can be used in a similar manner to a traditional Overdraft.They enable access to equity within a property to assist with investing and providing working capital / funds to assist run a business.

 

Similar to Overdraft facilties, a formal limit is established enabling you to draw up to this limit at any time. When funds are credited into the facility, the balance naturally reduces, once again enabling you to draw up to the limit as required.

 

A Line of Credit facility can help save your business time and money by providing a more effective way to manage your business expenses and payments.

They can be secured by either residential or non specialised commercial properties.

 

A Line of Credit can help you build your wealth by making the best use of the equity in your existing property and allows you immediate access to funds so you can take advantage of any business opportunities as they arise.

 

Interest is calculated on the daily balance of the facility and is charged monthly.

Accessing funds from a Line of Credit is the same as an Overdraft facility and includes the issuing of cheques, ATMs, EFTPOS, Internet/online banking and giroPOST.

 

 

 

 

Factoring

Factoring or Debtor Financing is another flexible form of lending, where funds are advanced against moneys (debtors) owed to you by your clients. It is a highly flexible and increasingly popular way to raise finance, sometimes without the need to provide bricks and mortar security.

If you compare Factoring /Debtor Financing to a traditional overdraft facility, the overdraft facility is limited to the amount of security available.

Factoring on the other hand, can increase along with your company. As a business grows, your expenses generally increase right along with the turnover. At the same time, you will be attracting new clients. All too often, companies will experience significant cash-flow shortages as they grow.

Because you are attracting new customers, your business has to maintain its control and ensure that moneys owed to you are collected within a reasonable time frame to cover your ongoing fixed expenses including manufacturing costs and wages for your staff.

 

 

 

Debtor Finance

By using Debtor Finance, you may be able to access funds up to 80% of your invoice value (outstanding debtor payments) within a shorter timeframe. Whilst there are fees involved, you may consider this to be no greater than offering your client a discount for early payment of their invoice.

Therefore instead of waiting to receive payment for a job or work completed in another 60 to 90 days, you have ready access to the funds to continue running and covering the ongoing costs of your business.

Additionally, as you now have access to funding a lot quicker, you can approach your suppliers for a discount as you may now be in a position to pay them on an almost "cash on delivery" arrangement.

We have access to different forms of Debtor Financing.

 

 

 

 

Debtor Discounting

This is an undisclosed arrangement between you (the supplier), and a financier, where you may be advanced up to 80% of the value of one or more of your invoices by the financier prior to receiving the payment from your customer.

 

You continue to collect your debtors (ie: moneys owed to you), and once payment is received from the customer for these financed invoices you then bank these funds into a specific debtor discounting account. The financier then draws on this account and pays you the remaining balance of the invoice, less their fee.

 

Within this product, you're given a choice of either discounting all or just some of your debtors. This allows you to maintain your usual relationship with the prompt payers, while you obtain discount finance against the customers that do not pay you straight away.

 

Your clients are not aware of your arrangements simply because nobody advises them.

In business, we all deal with customers and some are stronger or more financial than others. Furthermore, you can keep the facility for six months or 16 years, letting it stay dormant (unused) for lengthy periods. This way, if your company goes through expansion or tougher trading times, you'll have money available as you need it.

 

As there is considerably more work involved in this facility for the financier, the costs are higher, than what they would normally be for the Debtor Discounting option.

However, you do have to weigh up the higher costs of Factoring, especially considering you will have cost saving by not needing to employ someone within your business to do the following up.

 

 

 

Factoring

This alternative works much the same as Debtor Discounting.

The main difference, however, is that once you have sold your invoice and received up to 80% of the value of one or more of your invoices by the financier, the financier will collect the debt. This means that your factoring arrangement becomes known.

A considerable advantage by utilizing this arrangement is that you will no longer have one of your employees dedicated to chasing the payment of outstanding money from your debtors. Organisations that may Benefit from Invoice Discounting

Ad Agencies
Business Consultants
Computer Suppliers
Consulting Companies
Couriers
Distributors
Engineers
Logistic Services
Manufacturers
Medical Supplies
Plant Hire
Printers
Publishers
Recruitment Agencies
Real Estate Agencies
Stationers
Transport Companies
Wholesalers and many more

 

 

 

Commercial Bills

A Commercial Bill facility is an ideal form of lending to assist take care of your short and long term financial needs.A Bill can help you manage cash flow more effectively, by making payments only on maturity of the Bill and also provide interest rate protection and flexibility.

Essentially, a Bill is a promise to pay to the bank a specified amount on a specific date in the future (Bill Maturity).

This form of financing is very flexible and can be tailored to suit your businesses cash flow. Bills can generally be drawn for periods as low as 30 days and right out to 180 days.

Interest rates are priced off money market related rates, therefore ensuring a competitive interest rate.

The flexibility of the product also allows you to use the facility as a revolving line of credit (where funds are drawn when needed) or as a term loan, where the facility is repaid over a specified time.

Please note that fees and charges may be payable to the lender.

 

 

 

Mezzannine Finance

Mezzanine Finance is an additional form of financing available on both residential and commercial properties.As most banks/financiers can already provide funding up to 95% against the value of a residential house, this form of financing is not normally required.

The exception is where you are looking to raise additional finance against a commercial property, beyond the banks recognised debt lending levels/criteria.

Normally this type of funding is provided by private lenders, private companies and solicitors and is very restricted in its nature.

The loan interest rates are naturally higher given the higher risk associated with the borrowing and loan terms are relatively short.

The loan funds are available for any worthwhile business purposes, however restrictions may apply, depending of where the funds are sourced.

 

 

 

Overdrafts

An Overdraft Facility is a flexible line of credit, which is designed to fund seasonable and or unexpected expenses.Overdrafts are a particularly good facility as they can assist a business to help manage their cash flows better.

Essentially a facility limit is provided enabling a business to draw up to a formal limit to pay bills and general operating expenses, whilst waiting on income to be collected by the business.

Once the income is collected, the funds are simply credited to the overdraft facility to assist reduce the balance. As you only pay interest on the balance of the overdraft, accrued interest costs can be lessened by ensuring prompt collection of funds owed to your business.

Interest is calculated at a variable rate daily, which is then charged back to the overdraft monthly.

The majority of the lending institutions will charge a monthly or quarterly fee for providing the facility on an ongoing basis.

Funds are generally drawn from the account by issuing cheques. In addition to cheques, a number of banks also enable you to draw funds from the account via ATMs, EFTPOS, Internet/online banking and giroPOST.