Cashed-up – How Brokers and Accountants Can Help Businesses to Get on Top of Cashflow

1) Difficulty in accessing finance

One of the most significant problems faced by Australian SMEs is difficulty in accessing finance. Traditional lenders such as banks often have strict serviceability requirements, which can make it difficult for SMEs to qualify for loans. This is because serviceability is a standard guideline used to assess the ability of a business to pay back the loan. Except, it’s incredibly difficult to expect businesses across vastly different industries to fit the standard guidelines of serviceability. This problem is exacerbated by the fact that many SMEs may have been impacted by Covid19 and do not have the credit history required to secure a loan.

It would be great if every business could generate a fixed income month after month and assure the bank that this is how much they can pay,but we all know that’s not the case and it’s common for SMEs to have lean months and peak months. It’s a fact of life when running a business. Unfortunately, traditional institutions with strict lending criteria are averse to uncertainty.

2) Seasonal Cashflow

This brings us to the next point: businesses still need to cover their cost during lean months. Let’s take for example a retail store specialising in gift and novelty items. These stores typically make the bulk of their revenue during the holiday season when tourism is also at its peak and both tourists and locals are looking to buy gifts for their loved ones.

Outside of these seasons, their employees still work their shifts and operations still need to go on despite the drop in sales. In many cases, businesses need to operate at a loss during these lean months because of the lack of demand for their products and services. And when operating at a loss, cashflow can quickly dry up, which brings us full circle to the need to access finance to cover expenses until the peak months arrive.

3) Lack of financial knowledge

Most people get into business because they have a product or service that allows them to address a specific need or want of a consumer. However, they’re generally not experts at operating a business and usually require assistance especially with the finance-related elements. When they do have a need for finance most people will approach their existing bank, because traditional financial institutions are what people are familiar with. Few people are aware of alternative solutions. So if a bank says “no”, few are prepared with a plan B. This is where brokers come in.

How brokers and accountants can help SMEs

Mortgage brokers and accountants can serve as a bridge between business owners and finance institutions that can help find solutions to their cash flow problems. Finance institutions refer to all types of lenders whether they are traditional institutions like banks or alternative finance institutions like private lenders.

Understand that not all SME owners are aware of the different finance options available to them. So even if a bank says “no”, diversified brokers and accountants will be able to present other solutions for their SME clients to consider.

Moreover, when a business is looking for a loan, they usually view the product available in the same way they would a home loan. Their main goal is to look for the lowest interest possible. However, there is more to a loan than just interest rates. Loan terms, flexibility, and speed of processing are just some factors that can help determine whether a loan is a good fit for the borrower. And these are things brokers and accountants can advise their clients to help them make the best and most-informed decision to address their finance needs.

Benefits of Working with Private Lenders

Having a strong relationship with a good private lender can help brokers and accountants equip themselves with a range of finance solutions to address different needs for different businesses. In this way, even if a commercial client gets rejected by traditional finance institutions, a broker or an accountant can still present options so that their clients never feel stuck, desperately trying to get approved by the bank.

At Private Mortgages Australia, we provide commercial loans for multiple finance needs such as property purchase, refinance, bridging/working capital loans, equipment financing, ATO tax clearance, debt consolidation, construction finance, subdivision finance, and mezzanine finance among others.

Brokers and accountants with successful referrals receive upfront commission after settlement with no clawbacks. Our average loan size is $1M. One successful referral can potentially earn brokers and accountants an additional $20,000 (1% Referrer Fee + 1% Mandate Fee). So not only do you present more solutions to your clients, you also give yourself more opportunities to boost your earnings with successful referrals.

If you are interested in PMA’s referrer fees, be sure to visit our referrers’ page.

About PMA

Private Mortgages Australia offers short-term, non NCCP regulated flexible loans to business clients secured by freehold. Our credit team is readily available to accommodate brokers, accountants and borrowers alike. We pride ourselves on our quick response time. We also provide generous referrer fees within 24 hours of a loan settling with no clawbacks!

If you are a broker or an accountant and have a business lending scenario you would like to discuss, feel free to contact us or you can complete our Quick App form here (< 10 mins)