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At Mango we understand the pitfalls around commercial finance. No need to come cap in hand. We know what the banks are looking for, what they see as good business and what they just won't accept. We also know how to present your loan application in the best possible light. We get the banks fighting for your business. But better than all of that we're on your side. We work for you, not the bank. Our goal is to protect your business and to help you succeed. When you succeed so do we. So if you want us on your team, give us a call.
I have dealt with Alex twice now and both times he has exceeded my expectatio
Authentic, reliable and professional advice from someone you can trust is crucial when it comes to your finances. Alex always goes the extra mile to provide the best outcome and also to carefully explain so that you understand what you are doing and why, that's why I highly recommend him and will continue to use his service.
Getting a loan for a commercial building is an exciting time. But how would you feel if a couple of years down the track your bank calls in your loan (meaning they give you 30 days to repay it in full) and you have never missed a payment?
Unfortunately, I have seen all too often commercial borrowers being fed to the wolves, as banks look to protect their balance sheet or simply profit from your demise.
Most business owners buying a commercial property have fairly similar expectations to that off purchasing a home. That is you sign up for a mortgage and your belief is that, as long as you maintain your repayments over the term of the loan than everything will work out ok.
Unfortunately, small and medium business owners purchasing a commercial property, are not afforded the same protections they receive under the National Credit Code when they purchase their home.
That’s right you can be in default and never miss a payment!
I have found 3 things that catch most commercial borrowers out and in many cases they can be avoided.
When you first apply for a loan the banks make you jump through the hoops to ensure you can afford the repayments. Business is going great, you are in growth phase and the bank wants in.
But every business, just like the economy will go through tough patches. Profits might be down or disappeared and out of nowhere the bank gives you a call for a review. The banks managers job is to protect the bank balance sheet and after seeing your financials the bank might decide that you can no longer afford the existing loan. You meanwhile are working hard, never missing a payment, in fact your missing out, your doing without to make sure you never miss a payment. But if the bank manager decides that you are looking like too much of a risk, then they call in the debt now so they have a great chance of getting everything owed. They just might decide it is better to act now instead of waiting for things to get worse.
Unfortunately this is not a scare tactic. Take a look at the following article in the Sydney Morning Herald that puts a spotlight on engineered defaults by the banks.
As a business owner we all like to be in charge of our own destiny, if you are with a bank that conducts loan reviews, it is time to give us a call. We work for you, we can help you create a strategy to protect your assets and at the same time choose the right lender for you that puts you back in the drivers seat of your business.
When most people go directly to the bank they generally go cap in hand and will jump through whatever hoops is necessary to get a loan. The Bank manager will act like your best friend, but in reality they should be treated more like a wolf in sheep clothes.
The bank managers role is to make money for the bank. That includes protecting the banks interest when things go wrong. I have seen time and again banks strategically protecting themselves with the clients completely unaware. Banks will cross collateralize a clients assets and advise that you get a better deal by bringing all the business to them. But it can come at a huge cost. What happens are all your assets are now tied up and tied together. You can't sell any assets without the banks approval. Worse still, when you go to make changes it can become very expensive. The bank will now want a new valuation on each asset and if the valuer is feeling pessimistic about the economy, you might be struggling to get a realistic valuation. If any of your assets have now fallen in value, it can bring down your overall borrowing potential.
At Mango Money we are well aware of the pitfalls and we can work with you to structure your assets and your borrowing to give you the best protection possible.
Now I am not trying to be derogatory to any bank manager at all. In fact I deal with bank managers all the time and many of them are very nice people and some of them I regard as good friends. But I know their shortcomings, and so do they. At the end of the day they are paid by the banks to make the bank a profit. And if they fail they are out of a job. Many bank managers bonus will be tied to the profit of their portfolio, so the bank manager will focus on getting the best margin possible on each loan and ensuring they don't lose money on defaults. They are paid to keep a close eye on their portfolio, conduct regular reviews and continue to bring in more business.
Their focus is profitability, so sometimes they have to make decisions that will not be too popular with their clients.
As a broker we might be paid by the banks, but our focus is solely on looking after our clients. We don't care about the profitability of the bank. We just care, that our clients are looked after, and protected to grow their business. As we help our clients, by getting better rates, better terms and conditions our clients also help us grow our business by referring their friends, business partners and family to us.