Leveraging Finance to expand your business – it pays to be educated

With the impact of coronavirus and major banks tightening up on lending policies as a result of the Banking Royal Commission recommendations, accessing finance for some businesses may be harder.

But with more non-bank lenders entering the Australian market there are some great offerings for business owners who have had their ABN established for at least two years and GST registered without the need to provide financial statements, tax returns, forecasts, or ATO tax portals for amounts up to $250,000 for wheeled assets (trucks, vehicles, forklifts, etc.) and up to $150,000 for plant and equipment.

There can be a number of acceptable reasons why your financials are not available or up to date and the good news is that there are options available at reasonable rates on the basis you have a good credit score, paying off or own a property (otherwise 20 percent deposit required) and established for at least two years with ABN/GST registration.

The major banks are also offering business owners the ability to replace assets that have recently completed their finance term with new assets without the need for financials. So long as the repayment does not exceed more than 125 percent of the monthly loan repayment that is being replaced, you can finance whatever business asset you like. It’s important to note that some lenders are like for like assets only e.g., truck for truck not truck for drilling rig. You can also have multiple assets under finance that can be added together to replace the old loan for the new asset loan.

On 13 December 2021, the Federal Government announced changes to the existing SME Recovery Loan Scheme which included:

• A 6-month extension to the scheme with loans available until 30 June 2022,
• Business loans up to $5M
• A reduction in the Government Guarantee from 80 percent to 50 percent for loans provided from 1 January 2022
• Subsidised rates depending on the loan type and supporting security (if applicable)

A number of eligibility criteria apply, including turnover limits, and pandemic economic effects.

Did you know that financial management principles, including cash flow knowledge, financial ratios and debtor management can all have significant impacts on the success of your business?

ICI Australia’s Learning Programs give Members the ability to extend their knowledge, with modules for the new manager, through to the more experienced.  These include:

• Financial Management Principles for the New Manager - the important pieces all should know
• The Importance of Debtor Management
• Understanding Cash Flow in a Civil Business
• Managing a small civil construction business effectively
• Understanding Cash, Debtors and Asset Management

By Michael Ryan, Senior Finance Broker at Finlease

Also, to stay up to date with Industry news, events and information, make sure you follow the ICI Australia Linkedin page.