Finance for Small to Medium Business
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Transcript of Finance for Small to Medium Business
www.finx.com.au
By Brandon CHUAHBy Brandon CHUAH
FINANCE ESPLANADE Integrity . Service . Success
www.finx.com.au
www.finx.com.au
Topics Covered today
Types of Business Finance AvailableLender requirementsHow to Present your finance proposalBenefits of going direct to your BankBenefits of using a Finance Broker
FINANCE ESPLANADE Integrity . Service . Success
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www.finx.com.au
It is important that you get the correct type of loan to meet your funding requirements.Funding long term asset purchases using short term funding (Overdrafts or Lines of Credits ) could lead to lenders wanting to review your facility as being a hard core debt.Long term funding facilities for short term purchases can have a negative impact on day to day cashflow of the business.
FINANCE ESPLANADE Integrity . Service . Success
www.finx.com.au
FINANCE ESPLANADE
Integrity . Service . Success
www.finx.com.au
Business Term LoansBusiness Term LoansBusiness Lines of Credit/ OverdraftsBusiness Lines of Credit/ OverdraftsEquipment Finance Equipment Finance (Leasing and Hire Purchase)(Leasing and Hire Purchase)Agri-Business- Farm lendingAgri-Business- Farm lendingDevelopment Finance (construction)Development Finance (construction)
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FINANCE ESPLANADE
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Longer term funding requirementseg Purchase FactoryBusiness Loans generally are for a Maximum term of 15 yearsInterest Only periods usually available for up to 5 YearsSet regular monthly or quarterly loan repayments
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1) Short term finance
Working capital Funding day to day running
of the business Most expense in terms of interest rates
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2) Medium term finance Usually 3 to 10 years term Loan purpose : finance equipment,
business expansion, development of new products etc.
3) Long term finance More than 10 years Loan purpose : purchase land, buildings, plant and machinery, business or franchise
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Overdraft / Line of Credit
Shorter term funding requirements to meet working capital requirements
Peaks and troughs of cashflowUsually no monthly payment requirements
as long as facility is within the approved funding limit
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Debtor financeProvides cash advance to business against
credit sales.Loan is “repaid” when debtors pays the
invoice
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Debtor finance (ctn…)Fee structure : Management fee – 0.75 – 2% of invoices
received Discounting Fee – Interest charged on the
money advanced, plus fees. Arrangement Fee – One off fee to cover legal
charges, setup fee and government charges
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Equipment FinanceTax effective lending for business equipment that
has a limited lifespan (usually up to 5 Years)Funding allows business equipment and vehicles to
be renewed on a regular basis.Do not pay the full up front cost for the asset.
Reduces impact on cashflow.The asset being purchased is the security.Usually has a residual debt to be paid out from the
sale of the asset at the expiry of the contract term
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Hire PurchaseThe financier will purchase the asset and
hire it back to the customer for a period of time.
At the end of the contract, the customer will take ownership of the asset.
Tax deduction is available if the asset is used for business purpose.
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LeasingCustomer will enter into rental agreement
with financier. Financier is the legal owner.At the end of the lease term, customer will
have the option whether to purchase the asset from financier at residual value.
Rental payments can be claim as full deduction .
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www.finx.com.au
FINANCE ESPLANADE
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Specialised lending for Farming and Agriculture
Primary production income required to fund these loans.
Farming land is usually the primary security.
Many Lenders have business units that cater for farm lending
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Construction or Land subdivisionProject SpecificBuy, build/subdivide, sell and clear debt.Viability of the Project, experience of the
developer and presales are all important to the success of the project, as is the developers financial capacity to handle unexpected cost blowouts etc.
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Comprehensive Business Plan- incorporates the following:
Business AcumenAreas of specialty (what is your
businesses point of difference)SWOT AnalysisMarketing initiativesCompetitor analysisExpansion/growth plans
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www.finx.com.au
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Financial data2 Years Taxation Returns for Business and
individual DirectorsCashflow Forecasts (particularly for New
Businesses)Up to date BAS statements or Management
accounts (Quickbooks, MYOB or similar) Statement of financial position (Assets and
Liabilities)Security offered
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www.finx.com.au
FINANCE ESPLANADE
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Be transparent. Tell the Broker/ Lender the full picture.
Provide all information as highlighted earlier (full financial data, business plans, Bank statements etc)
Be confident and sell yourself and your business. It is important the lender has confidence in your management ability and skills to run the business successfully.
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www.finx.com.au
Bank direct VS
Finance Broker
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www.finx.com.au
FINANCE ESPLANADE
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Relationship with local ManagerYou know the Bank and have rapport
But Xyou do get their off the shelf price,
whether good or badXWhat happens if they do not approve the
finance
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www.finx.com.au
FINANCE ESPLANADE
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Access to all Lenders in the marketDetermine which loan package will be best
to meet your business needsKnowledge of competitive pricing offers
available
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www.finx.com.au
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Path of least resistance with the Lenders (e.g. is Low Doc available?)
Saves you time by doing the leg workRelationship is with your Broker who
liaises with the LenderUsually the Lender pays the broker a
commission so the service is free to you.
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Residential finance Commercial finance Personal finance Bookkeeping
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What services we provide :
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Follow through the whole finance application
Listen and understand your needs
Provide you professional advises
Save you time
FREE service!
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FINANCE ESPLANADE
Integrity . Service . Success
www.finx.com.au
FINANCE ESPLANADE
Integrity . Service . Success
www.finx.com.au
END
0433989177
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