Commercial & Business Loans
- Business finance options
- Security for business and commercial loans
- Property development finance
- Business loans /Line of credit/ Term loans
- Cash flow finance
- Hire Purchase
- Chattel mortgage
- unsecured business loans
- Leasing finance
- Buying or Selling a Business
* EZ Finance has developed relationships with a range of business and commercial lending specialists and major banks, and is able to assist with business finance for expansion, investment funding, leasing, purchase or refinance of commercial properties, retail shops, industrial land, factories and offices or cash flow lending.
Business finance options
Your EZ Finance commercial credit specialist can help you gain an understanding of your options and develop a sound financial plan on loan structures that suit you, low interest rates, tax effective structures, and a high level of service before committing to any expenditure. Each lender has their own programs and their own requirements so our commercial specialists can also help you understand the differences between loan types and lenders, including related fees and charges. There is a range of business facilities available, depending on the type of business you own or are purchasing, and whether you are looking for finance for a new or existing business.
Security for business and commercial loans
As with residential lending, your business or commercial finance lending will require something as security for your loan. Unlike residential lending where you are predominantly limited to offering property as security, with business and commercial finance you have a range of options available. Security options may include:
- Commercial property
- Residential property
- Guarantee of directors – often supported by residential/commercial property
- Assets of business, including both tangible assets such as stock and intangible assets such as goodwill
- Term deposit
There is a good variety of business and commercial loans available. Which one you choose will depend on your purpose for borrowing.
A business overdraft is an ideal financial option to cover short-term finance needs, particularly seasonal requirements and unexpected expenses. The business overdraft is still the most common type of business finance used in Australia, and operates as a line of credit facility that is most commonly used to cover any working capital requirements.
A business overdraft works by providing access to an agreed limit amount of money. You can draw up to your limit at any stage, and there are no repayments required as long as the amount you have drawn down and the interest charged does not exceed your agreed limit.
The overdraft facility operates on a variable interest rate with a cheque account attached, and you may or may not need to provide security or collateral, depending on the lender.
Property development finance
Development finance is very similar to a residential construction loan operating as a draw-down facility whereby you access funds required at each stage of the development, rather than the entire loan at one time.
A development finance facility is generally available for between one and five years, depending on the scope of the development project you are undertaking.
Most lenders will allow you to capitalise interest during the development period, with the full loan falling due upon sale of the development.
A minimum loan amount may apply to a development finance facility, usually around $500,000.
This is one of the most challenging types of loan to be funded by banks as there may be a need for a level of presales, mezzanine funds and equity participation.
Business loans /Line of credit/ Term loans
A business or term loan provides you with flexible access to finance when you need capital for purchasing a business or additional capital for business expansion, major plant and equipment upgrades, or purchasing commercial property.
The flexibility is in the loan type – both fixed rate and variable rate business loans are available – and you can usually choose to make principal and interest or interest only repayments.
Business loan terms vary widely between lenders, but can be as long as 30 years; the minimum loan amount you can borrow also varies widely so you will need to discuss your options with your residential and commercial finance credit advisor, at EZ Finance.
You will most likely be required to provide some form of security or collateral, such as residential or commercial property or business assets.
An additional benefit of a business or term loan is portability, with many allowing you to change the security used during the life of the loan.
Cash flow finance
Cash flow finance provides a business with access to the money tied up in outstanding Commercial invoices, allowing you to continue meeting your working capital requirements in periods of fluctuating or irregular cash flow.
With cash flow finance your business will generally be able to access funds totalling up to 80 per cent of the value of your unpaid invoices, which is particularly useful during periods of rapid growth, business acquisitions or seasonal sales cycles.
The outstanding value of your invoices acts as security so there is no need to use residential or commercial property or sales goods to secure a cash flow finance facility.
A hire purchase is a finance arrangement used to pay for goods over a period of time – usually one-to-five years – rather than paying the full cost upfront, with ownership retained by the financier until the hire purchase term is complete and you have made your final repayment. At the end of the hire purchase term the title of the goods automatically passes to your business.
Repayments on a hire purchase can be quite flexible and are often tailored to your business needs, ideal if your business operates on irregular cash flow due to seasonal sales cycles.
You can also choose to have a balloon payment at the end of the hire purchase term of between 10 and 40 per cent of the value of the goods. This balloon payment will reduce your regular repayments, but be aware that you will need to have the nominated balloon payment percentage by the end of the hire purchase term to complete your contractual requirements.
From a taxation perspective, a hire purchase arrangement may be beneficial. As it is deemed as a sale, a GST liability will arise, which you may be able to claim upfront rather than yearly as you make repayments.
The interest rate component of your hire purchase repayments and any depreciation on equipment may also be claimable for taxation purposes.
You should thoroughly investigate the taxation and accounting implications of a hire purchase arrangement prior to committing to this form of finance.
A chattel mortgage is similar to a residential mortgage, except the finance provided is used to purchase vehicles or equipment rather than property.
With a chattel mortgage, ownership of the goods passes to you on purchase, however the title to goods remains with your financier until the mortgage is repaid in full.
A chattel mortgage is particularly useful for any business operating on a cash method of accounting, including companies, partnerships and sole traders, as it allows you to claim the GST component of any vehicles or equipment you purchase upfront.
You may also be able to claim some tax benefits, including depreciation and the interest costs on your chattel mortgage.
A chattel mortgage is generally a fixed interest loan with a one-to-five year loan term, and is generally secured by the vehicle or equipment you are purchasing. As with a hire purchase agreement, you may choose to make a balloon payment or lump sum payment at the end of the loan term, reducing your ongoing repayment amount.
You should thoroughly investigate the taxation and accounting implications of a chattel mortgage prior to committing to this form of finance.
With leasing finance, a leasing company takes ownership of vehicles and equipment and then leases them out to your business for an agreed repayment amount and term, usually two-to-five years. Leasing finance may be ideal when you need vehicles or equipment that have long effective lives.
As a leasing finance agreement is a fixed rate, fixed term contract, it has the benefit of enabling you to effectively plan your finances over the leasing finance period. Lease payments are also usually tax deductible and you should be able to claim the GST proportion of your payments for tax purposes.
At the end of a leasing finance period, you can often choose to purchase the vehicle or equipment at a price specified in your original leasing finance contract. You may also be able to purchase any leased vehicle or equipment earlier in the leasing finance period by paying out the leasing finance contract and remaining agreed purchase amount.
As with all other types of business finance, you should thoroughly investigate the taxation and accounting implications of leasing finance prior to committing to this form of finance.
*Please note: Rates are subject to change without notice. Full terms and conditions and schedule of fees are set out in the lender's relevant loan contracts. Please speak to your Accountant or Financial Planner before making any financial decisions.