Growing your Business

Are you looking to expand your business, move into new premises or take on a significant new contract? Securing the right finance is crucial to removing potential growing pains.

Finance-related growing pains can significantly impact an expanding business. Proactive planning and strategic decision-making are key to managing growth effectively. Taking time to plan your business finances to feed your growth plans is an important strategy to enable growth. 

With experience in all types of business growth such as organic expansion, new technology, acquisitions, franchise expansion and more, I'd love to hear about your business growth plans and see how I may be able to assist you with the right finance options to achieve them. Call or email me to set up a time to talk.

Here are some additional strategies to prevent finance growing pains...

Cash Flow Management:

• Forecast: Model future funding needs to ensure sufficient capital. Cash flow forecasting helps you see when potential shortages in your working capital may occur. 
• Credit Lines: Arrange credit lines with suppliers where possible.
• Invoicing and Collections: Improve invoicing processes to reduce slow payments.

Assess Efficiency:

• Identify weak links or process inefficiencies across the business early.
• Emergency Funds: Maintain reserves for unexpected expenses.

Accounts Receivable & Payable Review:

• Review your accounts receivable process. Ensure invoices are issued as early as possible and payment terms are reasonable - otherwise you end up being the bank for other businesses!
• Read the Fine Print: Understand terms and agreements thoroughly.

Debt Management:

• Reduce unneeded debt to avoid financial strain. 
• Ensure you have the right debt for the purpose. Buying a well-priced piece of equipment at short notice on your overdraft can become costly when you need the overdraft for your cash flow. Refinancing hardcore debts so your lending facilities are aligned to purpose can save you in interest payments and free up your cashflow.

Please see our dedicated working capital and equipment finance pages for more details on those facilities. Below are some details on term business loans. There are a lot of options - so give me a call and I can use my 20 years commercial banking experience to narrow down the right options for your business purchase.

Business Term Loans - A lump sum of money leant to your business by the lender. You can often choose either fixed or variable interest rates. Most lenders offer a range of repayment options from monthly to yearly.  The loan term can range from 1-30 years depending on the lender and product. There are unsecured and secured options available. 

Unsecured Business Loans - Unsecured business term loans generally have shorter terms, lower limits and higher interest rates than secured loans. They are therefore normally more expensive than a secured option.

Secured Business Loans - When it comes to security, there are several different types of security lenders may consider for securing your loan. These include cash, residential property, commercial property or business assets. Lenders may apply different rates to different security types. Secured loans generally have longer terms, higher limits (subject to security) and lower interest rates when compared to unsecured business loans.

Bank Bill Business Loan - Known as a BBBL is a flexible loan option, generally for loans over $250,000. Interest rates are linked to the bank bill swap rate (see ASX about BBSW). Some lenders provide multiple rollover terms for example every 30, 60, 90, 120, 150, or 180 days.  At the end of each rollover term, your existing loan facility is effectively repaid by a new facility. The lender sources this new facility on the money market.   The new facility’s interest rate is determined by the current Bank Bill Swap Rate (BBSW) at that time, plus any applicable margin. 

Advantages:

• Interest Rate Flexibility: The interest rate is linked to the bank bill swap rate, which can be advantageous if rates decrease.
• Long Loan Terms: You can choose a loan term of up to 30 years, providing flexibility for repayment.
• Repayment Options: Tailor your repayments—interest-only, principal and interest, or a combination.
• Large Borrowing Amounts: Suitable for businesses needing substantial funds (over $250,000).
• Security Options: You can provide security (such as property) to support your loan.

Disadvantages:

• Interest Rate Risk: If rates rise, your interest costs may increase.
• Complexity: Linked rates and various repayment options can be complex to understand.
• Eligibility Criteria: Lending criteria can be more stringent.

A business overdraft is a flexible line of credit attached to your business transaction account which offers fast access to additional funds in your account when you need them. 

Your account conduct history (frequency and number of days overdrawn) is something lenders take very seriously when looking at an overdraft (or any other loan) application. Understanding your cashflow and planning ahead by putting an overdraft in place to cover forecast cashflow deficiencies helps your business continue to operate and maintain a good credit history whilst growing.

The application criteria, features and terms for business overdrafts vary by lender. Some general facts on business overdraft are listed below. If you would like to discuss if an overdraft is right for your business, please contact us.

• Business overdrafts can be secured or unsecured. Unsecured overdrafts generally have a higher interest rate and lower limits.
• Interest is generally charged on the amount owing and is calculated daily and charged monthly. 
• Monthly or annual overdraft facility fees are often charged as well as establishment fees for new facilities.
• Available to registered Australian businesses (sole trader, partnership, trust, or company).