Home' Smart Farmer : May 2012 Contents THE finance broking industry has
about 10,000 operators nationally
and 3000 in South Australia they
specialise in everything from home
and equipment loans to business and
commercial loans. There are 60 who
regularly write business loans.
Broker market share for the home
loan sector appears matured com-
pared with the business loan sector.
Industry regulation requires mem-
bership of the Mortgage Finance
Association of Australia, Credit
Ombudsman Service Limited, an
Australian Credit License or member-
ship to other acceptable bodies.
Finance broking services should
include, but are not limited to,
reviewing banking arrangements,
preparing business, tendering busi-
ness banking requirements to banks
or offering a re-negotiation option.
Have you considered engaging a
broker? It's important to consider
how a refinance occurs without one.
In many instances, businesses rely
on limited reference points and the
reason given is the 'time taken'.
Engaging a finance broker will cre-
ate a single point of contact to take
your business finance to the market.
This is very important when com-
mitting to a new piece of equipment
or additional land because the bor-
rowings used will remain in place for
several years and generally there is a
deadline in place for buying.
By JOHN DUNCAN,
Dunartin Capital Finance
HAT is the value of your
business? In this case, we
will measure value by the
cost of funds and terms of borrowing.
To determine value, certain types of
information is required to assist with
understanding your business -- finan-
cial performance, statement of posi-
tion, trading conduct and future
Most operators can outline details
for these four without referring to
When you borrow funds, it is nec-
essary to support your intimate
knowledge of the business so a third-
party can arrive at their own determi-
nation of risk with more confidence.
Lower the risk, higher the value of
your business, which translates to
cost and terms in which you borrow
So what are some of the things you
need to provide? And why?
What to provide?
• Financials for the past three years.
Business tax returns and direc-
tor/partner tax returns for the past
• Income/expense for current year
• Accounts payable/receivable
• Cashflow for 24 months, with
• Statement of position (all
• Bank statements for the past 12
• Copy of the most recent council
rates or valuation
• Succession planning
• Insurance/key person insurance
• Advisors and staff
The 'why' factor
• Analysis of earnings before tax
and interest cover ratio. Depreciation
schedule provides a guide to replace-
ment of equipment while personal tax
return will show other income.
• Provides current or most up-to-
• Current amount payable and
receivable under spotlight.
• Predicts income and expenses,
supported by assumptions.
• Information used to determine
• Ensures trading within limit.
• Rates and valuations provide
• Helps plan ahead for unforeseen
events such as permanent disability or
• Adds certainty to outcomes.
• Lets you undertake self market-
ing/sales, contract sales, or engage a
sales marketing expert.
• Includes insurance or other
aspects that overcome risk.
Historical financials are an outcome
of how your business performed over
a fair period of time. Current trading
brings us up to date and links into
cashflow estimates, with assumptions.
If no material change has occurred,
Value your business strength
it is reasonable to expect similar
results moving forward.
The statement of position infers
debt position or remaining equity.
Understanding the importance
of presenting your business in the
best possible light will provide
every opportunity to "achieve opti-
mum savings" and better terms for
A good broker doesn't just get
the deal done, they want the best
Why? A broker's income is
directly linked to your business
No client, no pay!
• Need to know more?
John Duncan 0418 421 787 or
Leeton: 42-50 Wamoon Ave
Ph: (02) 6953 7711
Griffith: 128-130 Wakaden St
Ph: (02) 6964 9999
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