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Business Lending

Business lending involves funding the purchase of a business or the refinancing of existing business debt. 

Whilst business lenders will extend a loan secured by the assets and value of a business, more often than not, the lender will seek real estate security (be it a residential or commercial property).

Lender Security

Lenders will only lend against the value of the business where

  • The business is deemed to be a ‘high value’ business with a solid intrinsic goodwill value
  • In an industry with high barriers to entry
  • Where the business has many and varied clients, not reliant on one or two major customers.

If a lender is prepared to lend against the value of a business, typically the lender may end up to the following ratios, i.e.

Goodwill – approximately 50%

Plant & Equipment – 25%

General Overview

When the lending is secured by the assets of the business, the interest rate is higher and the loan term shorter.  Business lending is similar in many ways to commercial lending, i.e.

  • Interest rate of the base rate and a risk margin.
  • Higher fees than residential lending
  • Lending may be subject to annual review
  • Longer lead times in assessing the application and drawing down the loan funds

When a business loan is fully secured by residential property, home loan interest rates and significantly reduced loan fees may be obtainable.

A word of warning – the cheapest rate may not always be the best option for you.

For more information click here.

Speak to one of our Finance experts, call 1300 805 221 or email bdm@betterchoice.net.au. We will work hard to get a loan tailored for you.

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