The growth in business lending to small to medium enterprises over the last few years has boomed with so many new entrants into the market. Now with over 80 players in the space it can be a tough gig to work out where you fit amongst it all.
There are both secured and unsecured options available with minimum and maximum loan amounts, PPSR’s (Personal Property Securities Registers), GSA’s (General Security Agreements) and directors guarantees to consider. Not to mention the cash flow lenders vs. your traditional financial statement and tax return lenders. And don’t forget the loan terms; 6 months, 12 months, or 3 years, maybe even 5 years, or do you want a split loan with that? Through in COVID-19 and boom you have a whole new world of lending to deal with..
Secured Business Loans
In general terms these loans are secured by property, be it a first or second mortgage where rates and fees can vary greatly and there are many variables.
Unsecured Business Loans
This type of loan is not secured by property but will generally have other forms of security. This may be things like a PPSR, GSA or a Directors guarantee. Some loans may also require a personal guarantee from the major shareholder.
Line of Credit
A facility where you can draw down the funds as required and only pay interest on what you draw down. This facility is suitable to most small to medium businesses.
Term Loans
Most commonly repaid over a short period of time, either 6 or 12 months. Although.. short term is now extending out to 2 years. Once funds are drawn down, repayments and interest are due regardless of whether the funds are being fully utilised or not.
On top of these more traditional types of lending, the Government have recently introduced the SME Loan Scheme.
This Scheme has been introduced by the Government to enhance lenders’ willingness and ability to provide credit, supporting many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus. This Scheme is available for new loans made by participating lenders until 30 September 2020.
It is pretty easy to get lost in it all but there is no need to be. Just send through your scenario and our team will come back to you with some options. If you need funds for a tax debt, working capital or for expansion and growth opportunities or even a purchase….. We have the solutions!