A large successful well-established family business for over 50 years was purchasing property for $4.4 million. They had been with their incumbent Bank for as long as they’d been in business. They had no debt and a squeaky-clean record – a model business and client in every aspect.
The first conversation with their Bank was positive and they were quoted an interest rate of 4.91%.The client then got in touch with a Pacific Finance Commercial Broker who went to the market on the client’s behalf. Pacific Finance was able to secure an interest rate of 3.74%.
The client ended up staying with their bank and were able to get a rate reduction through Broker negotiations. This translated into a $56,160 savings per year and $280,800 in savings over 5 years.
In commercial finance broking, we find that most clients finance facilities can be improved in pricing and more importantly in structuring. Generally the Banks cross-collateralise and take additional security beyond what they otherwise need to. Sometimes and critically, they don’t offer the full range of products that may be required in an optimum strategic portfolio debt stack.
There is a significant advantage in using a commercial finance broker – Pacific Finance has Brokers who specialise in understanding all business situations and deliver strong outcomes for clients, just like the above example. Facility reviews are relatively easy to do and will not take very long either. Below is a list of the documents we’d use to determine how we might assist a client.
Documents required in the business & personal banking review
- Business financial report (prepared by your accountant) – Most recent completed profit & loss and balance sheet. For personal reviews – most recent tax return.
- Management reports – Interim profit & loss for the current financial year, aged accounts receivable and accounts payable.
- Commitments schedule – Equipment (other than term loans)
- Loan schedule – Any term loans including your home mortgages with most recent bank statements, specific loan terms and covenants such as security
- Directors – Personal statement of position
- ATO – Current portal reports for integrated client account and income tax account
- Future needs – Succession, expansion, etc.