WHICH TYPES OF COMMERCIAL LOANS ARE AVAILABLE?

TERM LOANS

A Term Loan is a standard facility in which you borrow funds for a particular term.

These funds can be utilised for the acquisition of a business, business expansion, capital purchase or real estate purchases.

> The term of the facility and the applicable interest rate can be determined by the use of the borrowed funds.

DEBTOR FINANCE

Debtor Finance can be a cost effective means of obtaining funds that react to the changing cash flow needs of your business.

This involves factoring and invoice discounting facilities in which the Bank or Lender provides you with funding against your current debtors ledger.

> Cost effective means of obtaining funds that react to changing cash flow.

CASH FLOW FUNDING

Some lenders provide a range of short term lending products to assist you in spreading your one off costs over a period of monthly payments.

> These one off payments can include, GST, Taxation, Professional Fees and Rates.

COMMERCIAL BILLS

Commercial Bill facilities are generally used for larger borrowings and are an interest only facility.

Interest rates are determined by the market as at the time of draw down by what is known as the Bank Bill Rate. These facilities are generally interest in advance and are for shorter terms such as 30, 60, 90, 120 or 180 days. Reductions are permitted at each rollover.

> These facilities are popular for commercial property development funding.

LEASING

Leasing is a tax effective way of purchasing a vehicle or equipment with no initial outlay of capital.

The equipment is leased with the ownership remaining with the financier until such time that all payments including the residual or balloon is made at the end. GST is payable on leased equipment however it is payable in monthly instalments as part of the lease payments.

> Leases can be taken over one to five years.

HIRE PURCHASE

Unlike a Lease, with a Hire Purchase ownership of the equipment being funded is held with the borrower.

Any GST payable on the equipment being financed can be claimed back at the first opportunity after purchase. The other major difference with a Hire Purchase facility is that you are allowed to have equity in the purchased product.

> This can be very beneficial in reducing your monthly repayments and the term of the facility.

NOVATED LEASE

A Novated Lease can be a tax effective way of purchasing a motor vehicle as part of a salary package. A Novated Lease is a three way agreement between the employee, the employer and the financier.

> Put simply, the employee owns the vehicle and the employer makes the repayments from the pre tax earning of the employee.

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