An obvious challenge for the self-employed in general, and builders specifically, is the reduction of available bank loans.  The other challenge is the falling of property prices throughout Melbourne. 

The impact on consumers is that they are not able to borrow as much money as they could a year ago; their choices may include deciding not to build, or, alternatively, looking to reduce the cost of the construction by reducing the scope of their project and, consequently, your margins.  Many consumers will not be able to borrow any money at all this year, meaning their project may be put on hold indefinitely.

For builders, it may mean fewer clients and fewer jobs, higher operational (fixed) costs due to having fewer jobs to amortise the expenses, jobs of lower dollar value, and there may be less profit in the jobs over all. 

Commercial builders, likewise, will face a challenging year as many projects may not proceed due to banks revaluing the properties and deciding the project no longer ‘stacks up’.  Builder / developers will also be asked to contribute more of their own funds due to the declining property values and tighter lending parameters.  This will put additional cash-flow strain on the operations of their business.

Everyone in the industry, including suppliers, trades, builders and developers, will be trying to use everyone else’s cash flow to overcome their own funding challenges and this, in turn, will perpetuate the problem.

Individuals within the industry will also face possible devastating scenarios in which they approach a bank for more money and the bank calculates that under the tighter lending regime, they can no longer afford their existing loans, let alone any new ones.  This will cause the banks to take steps to ‘alleviate the supposed hardship’ by taking actions which are very detrimental to the person.

As members of Master Builders Victoria, you are well equipped to navigate through the challenges and even capitalise on the opportunities by engaging with your association and taking advantage of the services available.  For example, Master Builders Financial Services is still able to secure excellent loans for the personal and business needs of the self-employed in the building industry.

I invite you to meet with me for a discussion on your situation, your loans, your profit and cash flow position and even how you can do much better this year compared to the last. 

Harry Pontikis – Manager

[email protected] / 0411 258 058

Master Builders Financial Services

Chocolate Money t/a Master Builders Financial Services

Australian Credit License - 387277

Please note: the information in this article is not specific advice as your situation has not been taken into consideration.  Contact Master Builders Financial Services for tailored credit advice.