Think HBR

Choosing the best business loan for your business

Sean Gillard
Crosbie Finance
Determining the best business loan for the requirements of your business isn’t a simple matter and the research involved can be confusing and time-consuming. Unfortunately, this means that many businesses often end up with the wrong loan.
Choosing the best type of finance for your business should be based on a very clear financial strategy and discussed at length with your finance broker, accountant or financial planner.
Let’s look at just a few:
Business overdrafts – typically secured by a mortgage over a residential or commercial property. A convenient way of accessing cash for your business when other capital is tied up. Lenders typically charge a higher rate of interest for this type of finance.
Business loans – come in a variety of shapes and sizes, rates and terms. Most business loans are structured to assist a business to purchase larger capital items like motor vehicles. A business loan can also assist in acquiring other businesses, growing new business lines or expanding commercial property.
Commercial Bill Rate Facilities– often provided for loans exceeding $1 million.
The Bill Rate Facility is tied to the cash rate of the day, as opposed to the bank’s home loan rate of the day plus a margin, bill roll fee, and line or service fee. Like a business loan, the Bill facility can be repaid over an agreed term.
Asset Finance can include hire purchase, chattel mortgage and leasing:
Car Finance Lease – also known as an Asset Lease or Vehicle Lease, a car finance lease is an option for businesses or sole traders where you have the use of a car or commercial vehicle, but the financier retains ownership of the car. Tax deductions are applicable for business use and interest rates tend to be lower than other loans.
Chattel Mortgage – another option for businesses or sole traders where the financier holds the vehicle as security for the loan. Once the contract is completed, the security is released and you take full title of the vehicle.
Novated Lease – typically offered to employees of a business and allows them to take advantage of salary packaging. Under this finance arrangement, the vehicle finance is paid by the employer/business and the employee reimburses by way of pretax salary deduction.
Fully Maintained Novated Lease – also known as salary packaging or salary sacrificing, this lease is an Australian Tax Office approved method of salary packaging a car under which an employee leases a car and their employer pays both the lease repayments and the running costs from the employee’s pre-tax income.
Debtor Finance (Invoice or Factoring) – can provide a growing business quicker and greater access to cash by accessing up to 80% of the cash that is owed to the business through its Debtors ledger. Debtor financing is a specialised product that requires additional administration and finance controls. It adds convenience but is also typically a little more expensive than ‘traditional’ finance facilities.
For further information contact Sean Gillard at Crosbie Finance on 02 4923 4000 email or visit
Sean Gillard2 Sean Gillard
Is a Partner at Crosbie Finance. He has 17 years experience in finance and a vast network of industry contacts. He offers one of the most extensive arrays of lenders and products in the industry, covering business, investment, home, equipment and Self Managed Super Fund loans.