Think HBR

Why now is the best time to review your business lending structures

Craig Hartup
Prosperity Advisors
With APRA currently trying to slow the residential lending market in regards to investment lending, now is the ideal time for individuals and small businesses to capitalise on the fact banks are opening the gates for increases in small business lending.
Small business lending is growing quickly in Australia with increasing demand for cash flow finance being noted in the past 5 to 6 years and demand is escalating. Just as the residential market experiences historically low rates so does the small business lending arena and many banks are looking at expanding their product offering. Of the big four banks the NAB late last year pledged to lend $1 billion per month in the small business arena and this will continue to drive strong competition in the sector.
To further promote small business lending the government announced in this years May budget a $5.5 billion package of tax breaks for small business that includes the ability to claim an unlimited number of tax deductions for buying cars and machinery valued at less than $20,000 each. Businesses have until June 30, 2017 to take advantage of these lucrative tax breaks.
Quite often the line between small business lending and residential lending can become blurry for consumers, with some lenders treating loans in a company name as commercial whilst other lenders will say it is the security that is offered that defines the type of loan required.
This is where it can pay dividends to have access to a trusted and knowledgeable adviser to obtain the best offer and most effective structure for your needs and to also explain what is available and how it can work for your business. Effective structuring is key to ensure your business gets the best outcome in terms of tax advantages and the adequate cash flow to achieve your business plan.
Small business lending options:
There are an array of financing options available to small business depending on your business needs, so talking to your adviser about your requirements is a great place to start and will enable you to get access to a variety of lenders and work to get the best offer and rate. Some of the most common financing options available to small business include:
• Factoring / Cash flow lending
• Commercial Bills
• Commercial facilities to purchase or refinance commercial property
• Overdrafts
• Commercial leasing & Equipment finance
• Fixed term loans / Short term loans
• Novated Leasing
The above types of small business loans and commercial facilities are traditionally for shorter terms than residential loans and with rates and fees that are generally higher so do your research to ensure you source funding that will work in line with your business plan both in the long and short term. Additionally when looking to obtain any kind of business finance it pays to be organised and up to date with your paperwork such as tax returns and BAS statements as business finance can quite often demand additional paperwork that is not always seen in the residential lending space.
Prosperity has assisted our clients in re-structuring and accessing capital to grow their businesses or consolidate their debt. If you would like a complimentary discussion regarding your business lending, please do not hesitate to contact me.
For further information contact Prosperity Advisers on 02 4907 7225 email
Craig Hartup Craig Hartup
is a Mortgage and Lending Adviser with Prosperity. He has over a decade of experience in the financial services industry specialising in home mortgages, commercial and small business lending. Craig strives to find the best structured solutions and savings for his customers by aligning the customer’s needs with appropriate product features & benefits.