Hey team,
With a home loan you effectively need to front up with 20% cash. Do business loans work in a similar way? Is there a yardstick contribution you need to get in the door? I assume it’s a much higher proportion :)
Also given home rates are around 4%, what sort of rates are business loans running at these days?
I’m just wondering on this topic, I have no specific scenario in mind, but you can use the assumption that it’s to startup a new business, i.e. no revenue to date to show.
Gotta thank small business for putting everything on the line and in the process pay tax, employ people, work 100+ hours a week. ie keep the economy rolling.
Absolutely.
Base rate only, a margin may apply
Small Business Loan Rate 5.32% p.a.
Small Business Overdraft Rate 6.52% p.a.
Business Development Rate 6.43% p.a.
Overdraft Business Rate 7.25% p.a.
Business Equity Access Rate 5.55% p.a.
It also depends on the purpose of the loan… When I was looking at it, banks wouldn't lend money to secure a business lease only (IE:- without the plant/premises/equipment because all you're buying is basically goodwill.
So here's a story of my car lease decades back. When it finally came time after 5 years of monthly payments to pay out the 30% balloon, I arranged an overdraft to cover it. Bank manager rang to say all is good to go, so I posted a cheque to the finance company. It bounced and was return to me. I rang my bank manager who apologised and wrote a letter accepting fault.
I continued driving the car for a number of years until I came to sell it. So I got a REVS to see it was unencumbered. I then wrote to the finance company to let them know it was being sold and confirm all payments had been met. They sent a letter saying thank you for your excellent payment history and please come again.
I sold the car but ignored the returned cheque. Somebody's books aren't in order.
An Ozbargainer before Ozbargain.
Banks will give you a business loan or overdraft if you secure it with real estate.
Most small businesses run an overdraft on their business account to cashflow their operation and the bank holds security over the family home.
Gotta thank small business for putting everything on the line and in the process pay tax, employ people, work 100+ hours a week. ie keep the economy rolling.
If you're a startup, they are more likely to give you a personal loan so long as you can prove you can repay it - ie wages.
Or you could try kickstarter or GoFundMe