COMMERCIAL LENDING

There is an extensive market for what might be called commercial lending, ie loans to businesses of all sizes, from sole traders and partnerships to family companies to multinational traders. Loans may be required to start up or expand businesses, to purchase shops, factories or hotels, or to refurbish premises. All the high street retail banks have departments operating in this field, and there is also a wide range of companies that specialise in commercial lending. Such lending is normally secured on the company’s property or other assets, with the interest rate set at a specified margin above the lender’s base rate. The exact interest rate will depend on the risk that the lender believes is involved in lending to the particular company; this will be assessed by looking at the company’s past performance (where applicable), business plans, projected profits and management quality, as well as the business sector in which it operates.

CASE STUDIES

Hotel Purchase in Newcastle Australia.

  • Property details  

Located in regional New South Wales, the hotel came with an established bar, dining area, thirty-five rooms and gaming license.  

  • What did the client want? 

Because of competition at Auction, they purchased for more than anticipated. We informed their current bank of the new purchase price, but they would not consider increasing their loan amount. 

  • Key points  

When the LTV (Loan to Value) exceeds a certain level, in most cases higher leverage can attract higher fees and charges.  

  • What did we do?  

We prepared an in-depth presentation displaying the borrower’s track record at running hotels. We presented our case that the borrowers were credible for higher leveraged funding.  Shortly after we received an ideal offer for finance. 

  • The result  

Funding took place after the conditions were met. The clients were pleased with the outcome. 

  • 70% LTV 
  • 3.8% 
  • 3-year term commercial bills 

 

Purchasing a service station in regional New South Wales.

  • Property details

This service station was ideally located for refueling, had a long-term lease with a major supplier.

  • What did the client want?

Because their existing lender would not increase the leverage on current liabilities, we were tasked with assisting the investor to increase the leverage with reasonable terms.

  • Key points

Due to being a specialized security most lenders reduce the Loan to value ratio for service stations.

  • What did we do?

We searched around for the ideal lender – one that our client had not yet encountered. The lender we introduced offered ideal terms.

  • The end results

The client was pleased with the result and strong business relationship was formed.

  • LVR: 70%
  • Rate: 4.5%
  • Term: 10 years

 

Commercial purchase in Randwick.

  • Property details

A fully detached dwelling zoned mixed use was being used for medical practice, providing an opportunity to invest or occupy.

  • What the client wanted

The client wanted to purchase a new commercial property to occupy for his medical practice and we were tasked to source a suitable lender.

  • What did we do?

We knew of a policy from a major lender that the client could benefit from. so, after the client agreed to our terms of engagement, we arranged a meeting between the lender and borrower.

  • The end results

The meeting went well.  This was a reminder that by being aware of current lending policies and maintaining close relations with the lenders we continue to deliver extraordinary results.

  • 90% LVR
  • 3.1% per annum
  • 10-year term

 

Renovation on commercial property. 

  • Property details

A “muscle car” and prestige vehicle restoration business in Dandenong Melbourne needed more room in his workshop.

  • What did the client want?

A considerable amount of space in the workshop was used for an office and storing spare parts and equipment. He required finance to renovate and build a mezzanine level in the workshop to store the equipment and a small office.

  • Difficulties along the way

The client was unaware that he had a credit impairment on a mobile phone used by his son in the business. The issue was sorted out with the lender who accepted the situation.

  • Key point

Prime lenders will proceed with finance over certain credit impairments although it must be paid before funding takes place.

  • The result

We facilitated finance with a major bank for the renovation allowing him to store 5 additional vehicles for customers wanting work done to their cars. As a result, this investment increased the value of business and workshop.

 

Lease doc on a commercial property in regional New South Wales.

  • Property details

The property had recently renewed a long-term lease that ensured rental returns from a government department with fixed annual rental increases.

  • What did the client want?

The purchaser was self-employed and wanted to borrow 50 per cent of the purchase price. However, the client’s financial records were not ready, so we needed a lender with a flexible policy.

  • Key points:

Other than your typical Banks there are specialized lenders that have flexible lending policies.

  • What did we do?

On signing our terms of engagement, we arranged a meeting with the lender.

  • The end results

The client was pleased with the service.

  • LVR: 50% LTV
  • Rate: 4.25% interest only
  • Term: 25 years

LET US HELP YOU FIND

THE SUITABLE SERVICE

We offer an end to end financial solution with a focus on making the
process as simple and stress-free as possible.

LET US HELP YOU FIND

THE SUITABLE SERVICE

We offer an end to end financial solution with a focus on making the
process as simple and stress-free as possible.