New Zealand

Malcolm Anderson 14



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Business lending is assessed on a number of different components. Whilst serviceability is key, the risk assessment includes value and type of security (such as residential, commercial, industrial, specialised and alike); industry type; management experience; age of business; purpose of funds; financial ratios, margins, profitability and trend analysis; bank account performance and credit history; and business cash flow.

Lenders assess serviceability or repayment capacity slightly differently. Some will require up to the past three years of tax based financial statements whilst at the other end of the spectrum some will rely on management accounts or even your last BAS statement. In some cases a cash flow forecast complete with assumptions will be required. They will assess strength of your business to withstand interest rate movements, trading fluctuations and ability to meet principal and interest payments even if your loan is interest only.

One thing for certain, lenders treat ability to repay as paramount in their assessment process. And whilst they hold the ultimate decision whether to approve or not, the most important party in this finance application is you, the borrower – it is important you are comfortable with the ability of your business to meet the financial commitment you are entering. It should also be noted commercial lenders differ greatly in their risk appetite – some specialise in industry or security types while others exclude certain sectors entirely.

Understanding these differences (which are dynamic) is crucial in deciding where to place your finance application. A poor alignment between your needs, your business ‘risk profile’ and the risk appetite of a lender is not ideal for your future business growth and success.

How are interest rates assessed and what type of fees are applicable?

Interest rates are extremely competitive amongst lenders and generally the lower the assessed risk, the lower the interest rate, and similarly with value of security offered and comprehensiveness of supporting financial data. Lenders will charge up-front fees such as a Loan Approval fee, ongoing loan administration fees, and/or limit line fees, and set-up costs such as valuation fees and government duties, and quite often legal costs, documentation preparation cost and settlement fees.

How can William Buck Finance help?

William Buck Finance can advise and assist with your current or future lending requirements, such as debt consolidation.

Our team has many years of experience in business lending which when combined with William Buck’s accounting and business advisory skills ensures you get the most appropriate loan for your needs.

Working together, William Buck provides full 360-degree support for your business, allowing you to so you can meet your financial commitments and deal effectively with lenders.