The government is looking to ramp up its cheap unsecured business working capital loans for small to medium enterprises, and increase the total loan amounts from $250k over a three-year period to $1m over a five-year period that can be used for investment purposes as well as working capital.  The loans will still be unsecured; the bank will guarantee half and the government will guarantee the other half.

Unfortunately, I do not believe the beefed-up version will be any more palatable to construction-related businesses than the original version.  This is because the loan term is too short, putting immense cash flow pressure on businesses as the repayments are calculated on the full loan amount on a Principle and Interest basis, instead of being calculated on the amount used as is the case with an overdraft type facility.

Also, in light of the impending uncertainty with the economy due to the coronavirus, the banks are not eager to lend to businesses that may ask for reprieve from repayments or may go out of business due to the economic climate.  This will leave the bank with the inability to recoup its losses and its own shareholders required to pay for 50 per cent of the unsecured debt.  The small tweaks the government has made to the revamped version are not enough to make any material difference to the loans’ ability to actually assist businesses that need finance to operate or to help them survivethese difficult times.

Having said that, there are still many loans available designed specifically to assist construction companies operate their business, build, hold or sell their projects.  The following are just some examples of loans available through Master Builders Financial Services to assist its members.

Please note that lending criteria, fees, charges, terms and conditions apply to these and all loans.

LOAN 1.              Property Developer Finance

Loans for developers to payout the more expensive construction finance for projects.  Developers can hold on to the residual stock to sell at a later time.  

or

LOAN 2.              Private construction and land subdivision loans

  • Up to $10 million
  • Residential or commercial projects
  • Sydney, Melbourne (may consider some regional areas)
  • Up to 65 per cent of end value (NRV) progressive draws okay
  • 12 to 18 months
  • From 8.50 per cent
  • Business or investment only.

 

LOAN 3.              Short-term finance

Great for any short-term business purpose like securing a property until the main funding comes through.

  • Short term (bridging loan)
  • First registered mortgage
  • One month to six months loan term
  • Maximum LVR 75 per cent for resi securities or…
  • max 70 per cent LVR for commercial securities or vacant land
  • Specialised, asset-type loan.

Loan for cash flow

The quick $50k loan:

  • One to three- year loan term
  • Caveat secured
  • Desk-top valuation
  • Low fuss

These loans offer just a snapshot of builder-focussed options available for all scenarios for the self-employed or for business.

Whatever you do, don’t wait until you run out of money before asking for assistance as it will be too late. You need to act pre-emptively to ensure you have viable options available to you.

Contact the team at Master Builders Financial Services on 1300 137 539 to discuss your situation and discover the options available for:

  • Your business
  • Your personal situation
  • To buy property
  • Refinance existing loans for cheaper ones
  • Consolidate existing debts to help your cash flow
  • Organise lines of credit or overdrafts to help you run your business or your life.

 

Chocolate Money t/a Master Builders Financial Services.  Australian Credit License # 387277