When we heard from Grant about his experience with his bank we were not surprised!
As a small West Auckland business owner Grant had the option to take on a larger contract, but that meant the need for a new staff member, vehicle and tools.
Basically he had to get business finance so he could fund the growth.
He had been a business customer of one of the larger banks and they wanted cashflow projections (guess work really!) and suggested that he finance the vehicle and tools with their asset finance package and they were able to offer an overdraft with a $5,000 limit.
He has his mortgage with the bank so they have ample security, but that didn’t seem to matter much.
The asset finance offered was restrictive and meant he would need to have set repayments which were going to be a burden over the first few months.
Basically he walked out of the bank thinking that it was going to be too hard.
Grant Mentioned His Frustration With The Bank
As mortgage advisers we were talking to grant about refixing his loans and at that time he mentioned how difficult the bank had been.
We knew that he wanted to buy another house in the next couple of years, so letting the bank use the existing home as security was not a good option anyway.
Instead we mentioned some other options that we had for business finance that we believed would be more suitable.
We took the time to review his situation, what he thought he needed and then were able to recommend a good option.
In his case we suggested a simple revolving credit loan so he could draw down funds as needed, and repay the loan at a pace that suited the cashflow of the business.
Business Revolving Credit Facility
A revolving credit facility can be an ideal loan for a business, and especially if it is not secured over the family home.
For Grant we arranged a facility of $50,000 and the interest rate is 10.5% but like an overdraft you only get charged interest when you are using the money.
There is a small application and adviser fee to set up the facility, but there are no monthly fee.
It works out cheaper than most business overdrafts that the banks offer, and the limit in Grant’s case was more suitable too.
Apply Now For Your Business Finance
The application was not hard to put together and we had the approval for $50,000 within 24-hours.
Of course we needed some information;
- 3-Months Bank Statements
- Business Financials (for last year)
- Profit & Loss (for current year)
Sometimes we need some additional information, but we try to ensure that we avoid cashflow protections and business plans as they can take a lot of time and are not really relevant for small businesses, even if the business bankers thing they are.