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The best way to have a smoother loan process is to ensure that you provide all of the relevant paperwork and information. This helps lenders to have all the information they need to assess you. What do you need to provide these days?

Income Proof

Proof of Savings

Liabilities Conduct

Security

Business Loans

Business Loans can help fund business growth, expansion or any other worthwhile business purpose, with the flexibility of fixed, variable or capped interest rates and a choice of repayment options to suit cash flow requirements.

A fixed rate loan is a way for you to obtain finance for your business, with the added security of always knowing what your payments will be. It makes budgeting easier, because your cash flow forecasting and planning can be completed without the added pressure of managing fluctuations in the interest rate.

Fixed rate loans are available as both Business Loans and Commercial Loans. With a Business Loan, you can use your residential property as security and access lower rates, whereas a Commercial Loan allows you to use various security options.

At a glance:

A fixed rate loan can be structured on an interest only basis or principal and interest fully amortising basis.

If you’re looking for a more flexible interest rate option then a variable rate loan could be just the answer. That’s because over the life of your loan, you might benefit from a downward movement in interest rates

Variable rate loans available as both Business Loans and Commercial Loans. The difference being that with a Business Loan you can use your residential property as security to access lower rates. With a Commercial Loan, you can choose from a variety of security options.

At a glance:

Flexible repayment terms

Interest rates aligned to market movement

Make additional repayments, without incurring penalties

A variable rate loan can be structured on an interest only basis or principal and interest fully amortising basis.

Business Equity

You can draw on your business equity to help fund business growth, expansion or any other worthwhile business purpose, with the flexibility of fixed, variable or capped interest rates and a choice of repayment options to suit cash flow requirements.

Letters of credit are very useful for cash flow purposes. Often, suppliers ask for deposits upfront prior to the goods being manufactured. A letter of credit will often replace the need for placing a deposit with your supplier. Further, if letters of credit are allowed to be negotiated then some suppliers will grant credit terms such as 90 days from bill of lading, which is very useful for cash flow purposes.

Letters of credit is one of the most common methods of payment in international trade and are very useful when dealing with new suppliers. Although not a 100% guarantee that you will get exactly what you ordered, if structured correctly, letters of credit will ensure that suppliers have to meet all the terms of the document and you are more likely to get the quality and quantity of the goods your ordered in a timely manner.

Additionally, suppliers tend to like letters of credit as they can often transfer letters of credit to pay for their raw materials or indeed in some countries they can use these letters of credit as collateral to obtain business to business finance from their bank.

However, letter of credit facilities can be expensive and, because it is a specialist area, it is difficult to evaluate costs. Letters of Credit can seem bureaucratic and tedious but accuracy in print and translation are essential. A minor mistake could be costly.

Foreign Exchange

Most importers are purchasing or selling in foreign currencies. Historically, fluctuations in exchange rates can be the difference between a good year and an average one

There are several cost-effective options where you can either use the lender’s own facilities to hedge against exchange risks or Business Money can provide you with alternatives for spot or forwarding purchasing.

The two most common methods are as follows:

1. Forward Contracts

Achieves certainty of future exchange rates. Forward Contracts will allow you to commit to a rate now for your future currency purchase requirements. Can be for specific dates or for a certain period. The client must complete the contract even if exchange rates move in an unfavourable direction.

2. Option Contracts

A contract that gives the buyer the right, but not the obligation, to buy or sell future currency at a specific price within a specified period of time. The seller of the option has the obligation to sell the foreign currency to or buy it from the option buyer at the exercise price if the option is exercised. The client pays a premium for the option which is paid whether or not the option is exercised.

Business Line of Credit

A business line of credit is normally used to finance temporary working capital needs of the borrower typically accounts receivable and inventory. It is usually extended for one year. However, the structure of the line is flexible and can be accommodated to the needs of both the borrower and the lender.

Some of the common types of structure or “terms” for lines of credit are:

Demand line of credit

A loan payable “on demand” is one in which the lender leaves the loan open until the lender calls it due. In other words, there is no set term or schedule for repayment. This is very common and is actually preferred by the lending institution as it makes it possible to “demand” payment from the borrower when deemed necessary.

Revolving line of credit

It usually involves a commitment from the lending institution for a set amount of time “anywhere from 1 year to several years”. It allows the borrower to use the funds, as they need them and to repay them at will.

Asset based line of credit

A revolving line of credit where the amount available for disbursement is governed by a formula, which is usually the sum of the accounts receivable outstanding plus the inventory and multiplied by a factor (usually around 80% for accounts receivable and 50% for inventory).The amount owed by the customers of the borrower (account debtors) and the inventory is monitored by the lending institution and the submission of monthly accounts receivable ageing and inventory listings is a requirement.

Business Overdraft Facility

A business overdraft can provide the extra cash your business needs to cover seasonal or working capital requirements. Essentially, an overdraft is a method of allowing an account balance to operate in debit up to a pre-approved limit. These facilities are usually secured against property.

This type of facility offers clients the flexibility of a ‘line of credit’ attached to a cheque amount, providing a business the flexibility of drawing funds up to the overdraft limit as required. Although, there is a cheque account attached to this type of facility, access is also available (generally) through BPAY, cards, telephone and/or internet banking.

Generally, as long as the minimum monthly interest is covered, clients can clear this debt at any point in time and have funds available up to the limit as business opportunities arise. It also provides a convenient means of dealing with fluctuations in cash flow which every business experiences.

Lending Value Ratios (LVR’s) vary depending on the institution and type of security offered. Our consultants can assist you in this area, providing you with the details to ensure that that appropriate facility is considered for your individual circumstances.

It should be noted that the overdraft facility is provided as a revolving line of credit and that debt and interest are payable on demand by most institutions.

Debtor Finance

Many businesses in Australia are not aware that they can use their debtor book to effectively finance growth and even out cash flow. Debtor finance provides an innovative alternative to business overdraft facilities-one that is based on your debts without the need for bricks and mortar security.

Debtor finance is one way for businesses to raise working capital.

Debtor Finance – also known as invoice discounting – provides the business (the borrower) with finance based on the value of its outstanding debts. A revolving credit facility is set up which provides funding at up to 90% of the value of invoices being issued by the business. The rest is made available to the business, less any interest or fees, when their customer (or debtor) pays.

Through debtor finance, cash becomes available well before the debtor actually pays.

The extra cash has traditionally been used to purchase more stock, labour or advertising to grow the business and can be used for other purposes as:

By using funds released from their debtors, they do not have to forgo any equity by bringing in extra capital from outside the business.

Commercial Bills

A commercial bill loan is an arrangement you enter into with financial institutions which results in you making an interest repayment at the end of the loan term. The full amount that you borrow is to be repaid at the completion of the contract usually between 30 and 90 days.

Set Goals

Finding the perfect property requires a lot of research.

Plan a Budget

The deposit amount should be the first step in your budget analysis.

Understand the costs

Gaining comprehensive knowledge of buying a home early in the process will ensure you have enough savings and won’t be left with unexpected expenses later on.

Organise your information

Being organised at an early stage will allow you to be more confident when you apply for a home loan and look for your first home.

The first step to buying a home is saving a healthy deposit. Get started with our saving tips for first home buyers.

How much do you need?

The bigger your deposit, the smaller your loan will be and the less you’ll pay in interest. We recommend that you save as much as you can; 20% of the property price if possible.

To apply for a home loan, you need to show evidence of regular savings over a period of at least three months. This can include a mixture of cash, shares, equity in an existing property, Term Deposits, an inheritance or gifts.

5 savings tips for first home buyers

  1. Create a budget and stick to it as much as possible, Put your savings into a separate account so you’re not tempted to spend it.
  2. Limit unnecessary expenses such as memberships you don’t use, new clothes and any non-essential spending.
  3. Review your debts and work out how to pay it off as soon as possible. You may like to consolidate your debt to save on interest and fees, or start by paying off the debt with the highest interest rate first and work your way down.
  4. Saving can take time, but you don’t need to sacrifice your lifestyle. Factor in everyday costs, so you can still pay the bills and enjoy yourself.
  5. Make your savings work hard for you, by placing them into a high interest savings account that can’t be accessed easily. You’ll earn interest as you save, so you can apply for a home loan sooner.

Understanding the costs of buying a home can help you avoid unexpected bills and allows you to work out how much you’ll need to save as a deposit for your home.

The most common home buying costs, in addition to the purchase price of the property:

Remember, some costs will vary depending on your state or territory, so talk to one of our financial advisors who can support you through the process. Make an appointment online or email info@financeandmortgage.com.au.

There is no doubt that you have been speaking to friends and family about banking experiences and researching lenders online. Whilst comparison sites are a great source of information, it is always best to talk to an advisor face-to-face or over the phone to get custom advice.

Here are some quick tips:

We assume your weekdays are spent short listing properties and inspecting them.

At this stage you should have an approval in principle based on your income and financial position.

Here are some quick tips:

Understanding the costs of buying a home can help you avoid unexpected bills and allows you to work out how much you’ll need to save as a deposit for your home.

The most common home buying costs, in addition to the purchase price of the property:

Remember, some costs will vary depending on your state or territory, so talk to one of our financial advisors who can support you through the process. Make an appointment online or email info@financeandmortgage.com.au.

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