A number of builders have told us that they have found banks to be very unhelpful with their loan applications or their clients’ loan applications, leaving them with the impression they are not interested in assisting building-related companies or clients with their lending requirements. 

Our experience at Master Builders Finance is that our members are, to some extent, correct in this assessment with some banks effectively closing their doors to builders by being very strict with their lending guidelines.  The banks have also overlaid a huge swathe of questions and policies regarding COVID-19 in addition to the stricter lending parameters. This effectively disqualifies businesses from securing finance.  This also extends to the government’s $250k assistance package meant to assist businesses get through this period. Some banks are applying the standard affordability test to all loans, meaning that the borrowing business needs to show they can afford the additional $10,000-per-month repayments for the government assistance Loans as well as being able to show they can afford their existing debts before being approved. This, of course, runs contrary to the government’s intentions.

The lending landscape has become very complicated with the following questions commonly asked of business borrowers by the banks:

• Has COVID 19 affected your business? Why or why not?
• What are your risk mitigation strategies to temper the impact of the virus?
• What steps have you put in place to continue trading profitably during this period?
• How are you managing the additional risks presented by the virus?

These questions are not prescribed, but dependent on the quality of the loan application and the explanatory notes accompanying the application. 

Although some banks may not be interested in lending at the moment, other lending institutions are eager.  These lenders have increased their rates and fees, but that is meant to cater for the riskier environment at the moment.

My strong advice, if you or your clients are requiring finance, is not to tackle this complex situation on your own, but to engage the expert services of Master Builders Finance to act on your behalf.

If you approach your bank first and you are declined, your credit score will also be detrimentally affected by that interaction making our job even harder to secure a loan for you. I implore you to come to us first.

Please note: the information in this article is general in nature and not to be considered specific advice.

Chocolate Money trades as Master Builders Financial Services and has successfully served members since 2003, is in the Professional Lenders Association’s ‘Hall of Fame’ and has Finance Brokers who are in the top percentage of brokers nationally.  Our team is skilled, experienced and focussed on looking after the needs of Master Builders members.

I will also be running a series of free workshops in May to assist members navigate their business during these uncertain times.  Register your virtual attendance by contacting me or Master Builders Victoria.

Harry Pontikis – Director

0411 258 058 | 1300 137 539

Chocolate Money t/a Master Builders Financial Services

Australian Credit License 387 277