Embarrassing but need advice and help on small business!!

I’m pretty sure we paid extra to make that a feature of our home loan with ANZ, it was so our repayments would never be missed if the account was low thus keeping a good payment rating, if we do go over we are however charged $6 a day in overdrawn fees. Maybe it’s a case of you refinancing with someone with this available feature. I am however not sure what the overdrawn limit is.

Hi Johann,

This comment, along with your following comments, caught my eye.

It seems as the bank believes what you have is sound and sustainable. I wonder if you woudln't also benefit by an appointment with small business advisory service, banks finance office, accountant, business coach etc.

I would also assume anyone buying the business will want to see your books so any tidying up you do to increase profit margins will also increase potential sale price.

Pruning of expenses along the lines of what you are doing will be advantageous to you on both counts; cashflow now & sale price later.

HI Johann,

Good on you for doing some trimming with the expenses. Actual cashflow is one of the biggest challenges for small business, and plenty of skilled business people/tradesmen run into all sorts of trouble as a result of this…..and the fact that many of their customers try and use them as a bank, rather than paying them when they should, and have agreed to. Derek's comments ring true with regard to seeking assistance.
Good business banks now offer a huge range of free resources for small businesses – none of which was available when I was involved with start up businesses in the past; which would have been so handy.
THe best information I have found anywhere (which an accountant or business coach would charge (and why not???) you $$ for is on the nab small business website. Everything from starting a business, growing a business, running a business,  and even selling a business. Can I encourage you to check the selling a business bit out at http://www.nab.com.au/wps/wcm/connect/nab/nab/home/business_solutions/11/small+business?WT.mc_id=SBAAA&WT.mc_ev=click
You will find heaps of calculators and spreadsheets there to that will help, as well as details other places (inc state govt) where you can find other info.
I'm sure you can appreciate no lender wants to through good money after bad – none of us would in our business either – and that fees & interest are to be expected if we go over an agree contracted loan facility limit. And as you have already seen, it is not in anyone's interest to see a good business 'go under'.
Check out some of the info on the nab small business site, and I hope all goes well with both your business sale, and your future investing.
Cheers

hi Johan

First thing I notice is that one of the business loans is PI. Changing this to IO will assist reduce the repayments. And IO would be more tax effective as you would want to divert money to your home loan first which is not deductible. PI on a business loan means you end up paying more tax.

It is also unclear which loans are secured by which properties and you have your parents home in there valued at $360k, but business loans of about $520k so I think you may have cross collateralised your home and your parents home to get these. This is dangerous because you have your parents home on the line and because you have crossed securities. It could have been set up much safer perhaps.

But yes you could sell. There are 3 problems to this:
1. You would be selling to a company which you control.
2. You would still have to make payments
3. stamp duty.

If the aim is asset protection then there will be little if any in doing this.
Your other company would still need a loan of $400,000 or so that buy the house.
large amount of money wasted in stamp duty and legals, and

4. You will still have to qualify for a new loan. If you are having problems now then the bank may not lend.
5. there would also be tax issues to consider.

What about this:
– trying to change the PI loan to IO
– consider putting the business on the market
– maybe negotiate with your bank to re-extend the terms of the loans. eg. if you have 30 year loans which have been going for 5 years try to restretch it out to 30 years again. but this wouldn't affect IO repayments.