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Thread: Business Loans

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    Default Business Loans

    Kia ora! I'm asking this question in the hope that there are people here who have experience with business loans. Our cash flows are a bit tight so I wish to investigate a business loan. Is it a simple process/common practice with the bank? We use the same bank for property holdings but I assume that won't be an issue as we have a LVR under 30% ie equity > 70%. Is there a way of determining how much the bank might lend for say every $10k of stock on hand in the business? I understand that this might depend on other factors like income relative to stock on hand, net profit (ie income and expenses) or the sizes of mortgages. I do wonder whether a simpler task maybe increasing the mortgage size. Any insights would be really appreciated!

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    The bank will be much happier - and charge you less - for lending to the business and securing over the property(ies)

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    Quote Originally Posted by smpl View Post
    Kia ora! I'm asking this question in the hope that there are people here who have experience with business loans. Our cash flows are a bit tight so I wish to investigate a business loan. Is it a simple process/common practice with the bank? We use the same bank for property holdings but I assume that won't be an issue as we have a LVR under 30% ie equity > 70%. Is there a way of determining how much the bank might lend for say every $10k of stock on hand in the business? I understand that this might depend on other factors like income relative to stock on hand, net profit (ie income and expenses) or the sizes of mortgages. I do wonder whether a simpler task maybe increasing the mortgage size. Any insights would be really appreciated!
    Should be a pretty straight forward process I'm sure your bank will be able to sort out and if you can use RES equity get the better rate ...

    I borrowed 35k from my bank end of last year to pay some Provis TAX rather than take money out of the ASX/AUD .. was just an add-on to a commercial loan (thats secured by RES home equity)..
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." Carlos Slim Helu

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    Quote Originally Posted by JBmurc View Post
    I borrowed 35k from my bank end of last year to pay some Provis TAX rather than take money out of the ASX/AUD ..
    Is it acceptable to borrow money to pay tax?

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    Quote Originally Posted by smpl View Post
    Is it acceptable to borrow money to pay tax?
    Not in my books as it demonstrates a lack of financial budget and planning.

    Anyways, I would expect ANY business loan would come at much higher interest rates than the already high, mortgage rates.

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    Quote Originally Posted by SBQ View Post
    Not in my books as it demonstrates a lack of financial budget and planning.

    Anyways, I would expect ANY business loan would come at much higher interest rates than the already high, mortgage rates.
    Nope my overall loan book is a fraction of the capital base fully covered by RES equity = RES lending 5.99% .. all I did was increase one loan by 10% instead of selling shares and converting to a strong NZD at the time..

    I had no issue doing this or did the Bus Bank manager that secured me the extra funds at the time ..

    My company trading the ASX isn't exactly like a standard business with customers and weekly earnings .. Cap gains ...Dividends where I get profits from ..
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." Carlos Slim Helu

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    This has been crossing my mind recently. How do NZ banks consider the viability of a business if its secured over property which is loosing value? If they are doing their jobs correctly the loan on the business needs to be actively monitored given the value of the security. If this is the case, given falling house prices how many SME's will get into strife ?

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    There seems to be a divergence in opinion here. Do banks offer a better rate (fixed or floating) for business loans?

    Quote Originally Posted by JeffW View Post
    The bank will be much happier - and charge you less - for lending to the business and securing over the property(ies)
    Quote Originally Posted by SBQ View Post
    Anyways, I would expect ANY business loan would come at much higher interest rates than the already high, mortgage rates.
    Quote Originally Posted by JBmurc View Post
    Nope my overall loan book is a fraction of the capital base fully covered by RES equity = RES lending 5.99% ..

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    Quote Originally Posted by smpl View Post
    There seems to be a divergence in opinion here. Do banks offer a better rate (fixed or floating) for business loans?
    Best you talk with your bank ...fixed rates will be lower .. much depends on ones financial position .. I've never paid more than RES rates for all my commercial /business loans but then I've got a good amount of RES equity they can use as collateral .. many bank that I've approached don't like Kiwibank / BNZ etc ... Westpac/ANZ been great to deal with over the years ..
    Last edited by JBmurc; 08-05-2023 at 12:33 PM.
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." Carlos Slim Helu

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    Quote Originally Posted by smpl View Post
    Is it acceptable to borrow money to pay tax?
    At the end of the day money is money, is money.
    If you borrow to pay a bill and use your cash flow to pay tax there is little difference.
    Lack of cash flow is the issue and needs to be looked at.

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