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.
Most Lenders/financiers allow the repayment of term loans up to 15 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 above these margins, however restrictions may apply.
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 in reducing repayments.
Refer also to the Commercial Bills section for another form of term loan financing.
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 facilities, 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 in arrears.
Accessing funds from a Line of Credit is the same as an Overdraft facility and includes the issuing of cheques, ATMs, EFTPOS, Internet/online account processing and giroPOST.
Refer also to the information contained within the Overdraft section.
Invoice 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 Invoice Financing to a traditional overdraft facility, the overdraft facility is limited to the amount of security available.
Invoice Financing 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.
Organisations that may Benefit from Invoice Financing:
- Ad Agencies
- Business Consultants
- Computer Suppliers
- Consulting Companies
- Logistic Services
- Medical Supplies
- Plant Hire
- Recruitment Agencies
- Real Estate Agencies
- Transport Companies
- Wholesalers and many more
A Commercial Bill facility is an ideal form of lending to assist with 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 lender 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.
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 lenders also enable you to draw funds from the account via ATMs, EFTPOS, Internet/online transactional processing and giroPOST.