Dear Readers/Legitimate Financiers/Commercial Lenders/Private Financiers
In short we have negotiated a Heads of Agreement for a shop lease (35 sq m) to open a Hair Salon . The lease is excellent (Heads of Agreement as yet unsigned) .Our cashflow forecasts are favourable according to solicitor/accountant & residential broker.
We approached our bank re Business Loan/Leasing/Bank Guarantee for lease Bond. They have security over our home and an Investment Unit (cross collateralised)- and over 3 investment properties (held in a Pty Ltd Trust). We also have another property mortgaged w/ another lender – also held in trust.
While our equity situation is ok (LVR 68%) with principal home/investment property we have a serviceability problem w/ our bank. Refinancing in this current interest rate environment is not a consideration for us. A second broker (commercial specialist) has also concluded serviceability is an issue. He is encouraging us to have valuations done on our principal home & investment unit (cross collateralised) to determine whether we can apply for Leasing Finance($45 000 @19.5% over 5 yrs). Its the Banana Republic all over ! A 2nd mortgage would be taken over our 2 properties.
However we believe there must be a product – like a bridging loan that will tie us over for the first 6 mths….and at a rate less than 19.5%.
We are looking for a short term loan (6 mths max of $45 000) for Leasing/Fitout Finance & Bank Guarantee.This will tie us over a short term capital shortfall.
We are reqd to provide 4mth lease bond ($12000).This can be in the form of a Bank Guarantee – problem we came across here is that banks require serviceability criteria met to fwd a bank guarantee on our behalf.. Or we can provide a cash bond.
We require funds for the Fit out – $45 000. Again serviceability is the issue.
In the next 4 weeks our cashflow will be improved along w/ our investment debt. We have sold a property & will reduce our Investment debt considerably & have our Line of Credit replenished somewhat. This will enable us to finance the fitout but there will be little ' just in case funds' to carry us over the first 6-12mths.
We have a second investment property on the market. On the sale of this we will yield another $100k (returned to Line of Credit) and further reduce our investment debt by $150k .
Thus in the next 6 mths we will quite likely have suffic funds to fit out shop , pay a cash bond , and have reserve funds to carry us over the first 12 mths of business.Just won't have the funds in hand at the appropriate time.
This may be as clear as mud…but in summary we feel we have an excellent opportunity/Business Plan/Cashflow Forecast…just not the immediate & short term funding to get started. Bridging finance or private loan funds or some other product will see us thru this short term situation.
The proposed business presents a better return than (our) property at the moment !
If you know of a suitable product or private financing we'd like to hear about it.
If legitimate we are comfortable going into more detail.Regards
Sogni
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