Alternative business finance solutions
The Banking Royal Commission continues to dominate headlines with every indication this will continue until early 2019 when the final report is due for release.  The report is expected to outline a series of recommendations to change current consumer protection practises.

Interestingly to date, the Royal commission has not overly focussed on the business sector with specifics to business lending and the finance and banking landscape.  

As small business is Australia’s largest employer group, it’s seems more than fair for them to ask what about us? How do we get finance? Where do we go?
With banks continuing to restructure their operations, it’s become increasingly difficult to establish effective relationships with business banking managers. This has contributed to the growing trend of relying on accountants and their networks to source finance. 

Added to this is the continued focus on credit tightening. As a solution, a trend gaining momentum is the increased appetite for growing businesses to obtain finance from alternative means. An example of this is utilising equipment finance rather than the traditional overdraft or term loan.

The benefits of using equipment finance contracts which are usually either a chattel mortgage or commercial hire purchase, can include:

  • Opportunity to finance up to 100% of the cost of business equipment 
  • Helps to preserve important cash flow within the business 
  • Repayments can be structured to accommodate seasonal business fluctuations   
  • Allows small business to access the latest in equipment and technology
  • Frees up working capital as the purchase is removed from the business overdraft 
  • Potential Tax Benefits
  • Opportunity to upgrade and dispose of old equipment 
  • Security for the financier is the equipment itself, no need for bricks and mortar security
  • Pricing is very competitive with fixed interest rates for the life of the contract and often not significantly more than home loan rates.

Additionally, the process is quite simple with comparatively quicker turnaround times than the traditional overdraft or term loan increase.

Recognising this trend a few years ago, Prosperity Advisers Group established a specialised lending team who deliver the full range of lending services for both individuals and businesses.

The Prosperity lending team has extensive networks with all the major financiers to access competitive rates. If you’d like to know more, contact Alex Warian who leads our Lending team on +61 2 8262 8756 or your principal adviser.

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