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Lending options for your business

Posted on November 23, 2015 by admin

Whether your business is experiencing sudden growth or financially struggling, it is crucial to manage your cash flow effectively. Cash flow gaps or being unable to access extra funds can put a real strain on a business. However, there are lending options available to businesses that can help with different cash flow needs.

Before considering lending options, businesses should draft a cash-flow projection to predict their sales and expenses such as cash in, monthly loan repayments, stock levels, set-up costs, and fixed and variable expenses. Cash flow forecasts can help to prepare for best and worst-case scenarios while allocating what times of the year extra cash are needed.

To best meet your cash flow requirements, lending might be necessary. The lending option chosen should meet your business’s needs. For example, a business credit card may be appropriate for immediate purchases and paying off smaller bills. Alternatively, a business overdraft is more suitable for larger, more frequent seasonal gaps.

Inventory management is key to good cash flow. Stock levels should co-ordinate with high and low sale seasons. For example, if you run a seasonal business where peak sales are during the holiday season, you must account for higher levels of cash to be available.

A business line of credit may be a viable option for long-term or larger purchases. A business line of credit provides lower interest rates with the flexibility of an overdraft allowing long-term access.

For business owners looking towards long-term investments to re-invest in the business, a business loan may be more appropriate. If you are seeking to purchase new equipment or business vehicles, asset finance may be suitable. Asset financing uses assets such as accounts receivable, as security interest to borrow funds.

Lending is a great way to stay on top of your finances provided that the lending solution is correctly matched to your business’s needs.

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Avoiding mortgage default

Posted on August 26, 2020 by admin

As individuals struggle with cash flow through the coronavirus, the Australian Bankers Association records that repayments on almost 500,000 mortgages have been deferred for six months. While repayments can be delayed, they cannot be avoided altogether.

Lenders can send you a default notice the day your repayment is overdue. However, they could also wait until your repayment is overdue by 90 or more days. When you receive a default notice, you are given 30 days to repay the amounts you have missed in addition to the regular repayment on your loan. Individuals who are struggling with their home loan repayments can avoid mortgage default by considering the following.

Contact your lender
Lenders are generally willing to work with you through financial hardship. Don’t be afraid to contact your lender to discuss your situation and find out what options are available for you. Lenders are often willing to negotiate short-term variations to repayment schedules that both parties can agree to. However, make sure that you do not agree to unrealistic repayment conditions that cannot be met.

Many Australian banks are offering a six-month deferral on mortgage repayments (including interest) for customers who are experiencing financial hardship as a result of COVID-19. If this is you, contact your bank to see if this is an option.

Apply for a hardship variation
Mortgage holders may be able to change the terms of their loan or temporarily pause or reduce their repayments under a hardship variation. A hardship variation can still be requested after you receive a mortgage default. To apply for one, contact your lender’s “hardship officer” and tell them that you wish to change your loan repayments due to financial hardship. This will usually require you to explain why you are struggling to make payments and to estimate how long your financial problems will continue to determine how much you can afford to repay.

After submitting a hardship variation request, your lender must contact you within 21 days with the outcome of your request. They may ask you for more details regarding your request; in this case, they must contact you again within 21 days from when you provide the additional information.

Consider selling your home
Selling your home is a tough decision, but in some cases this may be the better option if your circumstances are unlikely to improve. If you get to the point where your lender takes possession of your home and sells it, it’s likely that you won’t make as much as if you sold it yourself. When you sell your house on your own terms, chances are you will get a better price and avoid having to pay the legal fees passed on by your lender. Inform your lender if you decide to sell your home; they may ask for proof, such as a copy of the contract with your real estate agent or property advertisements.

Renting out your home until you can afford to make repayments again may also be an option if you are able to live somewhere else during this period.

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