Hey Guys,
I run a small co-working space that has enjoyed a great deal of success since opening 3 years ago. My issue is that recently I have gone to get a loan to expand my business, but because I originally sold my property to invest in the business I have no “security” to get a loan with the big banks. To make matters worse they say that if I did not only would they half the interest rate and approve the loan in under 4 days but would be happy to lend 4 times the funds.
So with my only hurdle being “security” I have been wondering if there is someone out there that would view this as an opportunity to be a silent investor in what is essentially a business subleasing commercial real estate. I would happily pay (as an ongoing investment fee) $1000+ and I gotta believe that there is someone out there that would appreciate the additional funds to go towards additional serviceability of their own portfolio or paying down a mortgage faster or even just cash in the pocket.
What I am trying to figure out is (in theory) do you think this would be attractive oppertunity to anyone and if not then what sort of arrangement (or security) would make it attractive?
Carl
Hi Carl
I wasn’t entirely sure what you meant by “I would happily pay (as an ongoing investment fee) $1000+”. Did you mean as a monthly interest repayment? My other questions are: What amount were you looking to borrow, and for what purpose? eg Purchase office chairs, pay for advertising etc. What “stuff” do you and your business own? Perhaps you own a car or a boat that could be used as security. Perhaps the business has some plant equipment that can be used as security.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Carl
I am also a little confused as to the post.
Business Finance is something that most of the Banks pulled out of post NCCP and GFC and therefore is more of the domain of the private lenders.
In saying this of course a private lender is still going to want some sort of security whether it be a second mortgage in your PPOR or an IP or a charge against some other form of chattel.
If you give us a little more detail we maybe able to assist you further or point you in the right direction.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Carl,
Are you looking for rent to buy kind of property ?
My understanding from your post above, you are happy to pay for $1,000 per week in exchange to have a property. Is this correct ?
Perhaps, let us know what exactly you want and what/how do you prepare to trade off. so we can help you to a right direction.
Thank you
Sounds like you want an investor to come in somehow to enable you to get finance – what sort of security will the investor have. Will there be change of shareholdings in your company? If so what are the stamp duty, CGT, and other consequences.
If you are operating as a sole trader how could this work at all, what would they be getting.
Doesn’t sound practical to me at first glance.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for the responses guys, to clarify:
– The business has gone extremely well renting out office space to other small business owners, and as a whole this concept of co-working spaces has grown exponentially over the last 3 years.
– I run Your Desk (www.yourdesk.com.au) and over the past 3 years we have built up to offering 80 desks, with a gross turnover of just under $1m and a profit margin of around 40% and no debts. I want a loan of $400k to expand to 2 other locations and purchase 2 company vehicles that are sorely needed.
– Despite our success we are at an in pass right now, JacM is right that out of the big 4 banks only 1 will consider an unsecured loan to us and the terms of the loan are really steep. All of the big 4 banks say that with a property attached they would lend what I am asking for inside a week, no problems!
– So one thought was to find someone that has a property, that would become (for lack of a better term) a “short term stakeholder” with us, and in exchange for simply allowing their property to be the security they would receive a monthly dividend of $1000 or more.
– I am guessing that this “short term stakeholder” would also like some additional form of security as part of the agreement, but I am drawing a blank about under what additional conditions someone would be comfortable to enter this sort of deal and am open to suggestions.
– We are not looking for someone that would be willing to do this in exchange for a piece of equity, it is a family business and we would like to keep it in the family and have already have some great offers from synergistic business’ and individuals that if we were inclined to pursue that road would likely partner with them.
– to answer specifics brought up:
@JacM- banks are not looking favourably at office equipment to loan against, they see office equipment and plant as having a 3 year depreciable life span, so any monies borrowed against this would have to be paid back in the same timeframe.
@Qlds007- we would be interested going down the private lending path and I am confident we could provide an excellent business case, but it seems you gotta know a guy to get in with the private lending crowd.
@scha9799- I am well versed in Vendor Finance and its not the solution I am looking for in this case.
@Terryw- the business is a company and has been trading as “Your Desk Pty Limited” since May 2011Thanks Guys,
CarlCarl, sounds like a great business idea. But I doubt you will be able to find finance as it would be too risky for the lender.
Do you personnally own any property at all? Does the company own the buildings you operate fomr? ANZ can go up to 100% LVR for commercial loans in some cases.
As for a private investor you could sell shares in the company, but sounds like you want to keep it in the family, which is understandable.
If you are talking about purchasinng another premises to operate from then there may be options – a SMSF for starters BTW the same entity should not own the building and the business.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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