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The Business Funding Blueprint: What Every Owner Must Know · TFS WealthCast

• 0:01
  SPEAKER_01: Plan smart build wealth This is the TFS Podcast where money talk gets real and financial freedom is more than just a goal.
• 0:12
  SPEAKER_01: Without further ado, let's dive in.
• 0:17
  SPEAKER_01: Hi guys and welcome to another episode of the TFS Wealthcast.
• 0:21
  SPEAKER_01: And with me today we have one of our newest brokers at TFS.
• 0:25
  SPEAKER_01: His name's Nathan.
• 0:27
  SPEAKER_01: I'm not gonna pronounce his last name.
• 0:29
  SPEAKER_01: I'm gonna let him do it because I might mess it up.
• 0:31
  SPEAKER_01: So Nathan, over to you, man.
• 0:33
  SPEAKER_00: Hey, um, thanks for having me on.
• 0:35
  SPEAKER_00: Um yes, it's Nathan Ravinsky here.
• 0:37
  SPEAKER_00: So uh I just joined not too long ago.
• 0:39
  SPEAKER_00: I figured we'd uh get a podcast out of the way, my first podcast.
• 0:43
  SPEAKER_00: So I'm getting to do that guy uh with you, so that's uh pretty cool.
• 0:48
  SPEAKER_00: There you go, ladies and gentlemen.
• 0:50
  SPEAKER_01: Nathan Ravinsky.
• 0:52
  SPEAKER_01: That's right, that's right.
• 0:53
  SPEAKER_01: He's in TFS now, and the first podcast we are gonna talk with Nathan about business loans in Australia.
• 1:00
  SPEAKER_01: So let's jump straight into it, Nathan.
• 1:03
  SPEAKER_01: Why does funding matter?
• 1:06
  SPEAKER_00: It's a good question, you know.
• 1:08
  SPEAKER_00: I I think ultimately that comes back to the question of you know, why do businesses need funding?
• 1:14
  SPEAKER_00: You know, one of the most important things I think you need to think about, a lot of people just think they need funding to get over a hurdle or something like that, but it's important to have goals, long-term goals, especially when it comes to business loans, because you have a lot of cowboys in the market there with high interest rates.
• 1:31
  SPEAKER_00: So you need to make sure you know that you're going down the right path long term.
• 1:36
  SPEAKER_00: And you know, you might need things like cash flow or you know, maybe you want to even purchase a business, maybe asset finance, something like that.
• 1:44
  SPEAKER_00: It can get you over that hump when you're kind of waiting for invoices to come through or different things like that.
• 1:50
  SPEAKER_00: I think ultimately it's important though to keep in mind the long-term goal.
• 1:54
  SPEAKER_00: Don't just take a business loan for short term unless you need that to get over that hump, right?
• 2:00
  SPEAKER_00: Um, because the repayments can be higher, especially if it's unsecured.
• 2:05
  SPEAKER_01: Awesome.
• 2:06
  SPEAKER_01: Thanks for that, Nathan.
• 2:07
  SPEAKER_01: Uh, and with that, I think let's jump straight into a few types of business loans.
• 2:12
  SPEAKER_01: Um let's talk secured loans.
• 2:16
  SPEAKER_01: What are secured loans?
• 2:18
  SPEAKER_00: Yeah, so look, the thing with the secured loans are generally you get them from the larger banks, they take a lot longer to process.
• 2:26
  SPEAKER_00: Um, they are backed by you know assets, so they do have lower rates.
• 2:30
  SPEAKER_00: Um, because they are from major lenders, uh, the processing times can be weeks.
• 2:35
  SPEAKER_00: Sometimes it can even take a month or more.
• 2:38
  SPEAKER_00: Um, so it really just depends on what you're looking for.
• 2:40
  SPEAKER_00: You know, a lot of people need something quickly, and probably going the unsecured route uh would be better in that respect.
• 2:48
  SPEAKER_00: All right.
• 2:49
  SPEAKER_01: So, with that being said, you just mentioned the second type of loan, so let's talk about unsecured loans.
• 2:55
  SPEAKER_00: Unsecured loans, yeah.
• 2:56
  SPEAKER_00: So look, this is my specialty, this is the background that I come from.
• 2:58
  SPEAKER_00: And uh with unsecured loans, you can get funding as quickly as a day to a couple hours, really.
• 3:05
  SPEAKER_00: It just depends.
• 3:06
  SPEAKER_00: Um, you know, I've seen deals get funded in maybe like four or five hours.
• 3:10
  SPEAKER_00: It just depends on you know how clean it is.
• 3:13
  SPEAKER_00: But if everything's up to scratch, the unsecured funding is probably the way to go.
• 3:17
  SPEAKER_00: You can get funding very quickly and the funds released to you.
• 3:20
  SPEAKER_00: And depending on the lender, there's different repayment options there as well.
• 3:25
  SPEAKER_00: So you don't need to have any type of security, so the rates are higher.
• 3:29
  SPEAKER_00: Um, and it does require stronger cash flow, but it can be worth in the long run if you do need the money quickly.
• 3:37
  SPEAKER_01: Okay, so so so unsecured loans are better if they need the money quickly.
• 3:40
  SPEAKER_00: That's right, yeah.
• 3:41
  unknown: Okay.
• 3:42
  SPEAKER_01: But you did mention it's higher interest rates.
• 3:44
  SPEAKER_00: That's right, yeah, the rates are uh significantly higher.
• 3:48
  SPEAKER_00: So if you're expecting, you know, uh secured loan bank rates when it comes to unsecured lending, uh, unfortunately you you're not really going to find that on the market.
• 3:56
  SPEAKER_00: Uh, it is very much a niche that the unsecured loans have.
• 4:00
  SPEAKER_00: You know, quick funding is what they do, um, but the rates are on the higher end.
• 4:06
  SPEAKER_01: Understood.
• 4:07
  SPEAKER_01: Uh let's talk about equipment and asset finance because that's also a type of loan that people uh take out.
• 4:14
  SPEAKER_00: Yeah, yeah.
• 4:15
  SPEAKER_00: So I mean, look, it's kind of uh similar in a lot of ways uh with the secured loans, uh, because it spreads the cost of the vehicles or the machinery kind of over time, right?
• 4:25
  SPEAKER_00: Um depending on the lender, they can kind of help with that.
• 4:28
  SPEAKER_00: So instead of having to do like an upfront payment, you can spread it out and kind of help with your cash flow, which you know for small businesses is super important.
• 4:36
  SPEAKER_00: A lot of clients I've spoken with kind of go down that route uh with asset finance, and so they need to sort of have a uh I guess a way to purchase equipment to keep working.
• 4:47
  SPEAKER_00: If something breaks down, uh they might need an equipment, but they can't afford the full uh you know cost of it.
• 4:52
  SPEAKER_00: So generally going down that route is probably better when it comes to something that you really need if you want to spread those payments out.
• 5:00
  SPEAKER_01: Okay, and also Nathan, uh now on the topic of flexible funding, yeah.
• 5:06
  SPEAKER_01: Uh a line of credit.
• 5:08
  SPEAKER_00: A line of credit, yes, yes, yes.
• 5:10
  SPEAKER_00: So look, line of credits, they're instead of you know just depositing one lump sum into your account, uh, you essentially have, let's say, a 50k line of credit, right?
• 5:20
  SPEAKER_00: You can draw 10k, 20k, and then you can wait a couple months if you want, and then draw the rest.
• 5:25
  SPEAKER_00: So you don't need to keep paying interest on something that you're not drawing.
• 5:29
  SPEAKER_00: You essentially get an approved limit, and then you can draw up to that limit.
• 5:33
  SPEAKER_00: So it's a lot more flexible in that regard.
• 5:36
  SPEAKER_00: You know, with a term loan, uh, a lot of lenders that are insecure do offer term loans, and with those, you do need to actually have payments that are more consistent and you do get the full amount up front.
• 5:50
  SPEAKER_01: Okay.
• 5:51
  SPEAKER_01: Uh, an interesting thing you mentioned uh earlier when we were talking, you were talking about invoice finance, I believe, and that's right.
• 5:59
  SPEAKER_01: Yeah, how people can uh access money that's tied up in unpaid invoices.
• 6:04
  SPEAKER_01: That was very that now that's very interesting uh to me, and I would like to talk a bit more on that with you.
• 6:10
  SPEAKER_00: Yeah, you're the expert boy.
• 6:12
  SPEAKER_00: Yeah, that's right.
• 6:13
  SPEAKER_00: Well, look, uh, when it comes to invoice finance, um, there are lenders that will let you essentially give them you know a copy of those invoices, um, and then they'll let you access that money before it's actually hit your account.
• 6:25
  SPEAKER_00: It can take some time, you know.
• 6:26
  SPEAKER_00: Generally, if there's unpaid invoices, things like that, it'll let you access that money quicker, a lot quicker than it would take usually for these you know invoices to actually come through.
• 6:36
  SPEAKER_00: So uh it's a good way of kind of I guess bridging the gap between a uh line of credit and a secured term loan.
• 6:44
  SPEAKER_00: You could do like an invoice finance, and a lot of uh businesses do like doing that if they have delayed invoices.
• 6:50
  SPEAKER_00: Uh it's quite a common thing.
• 6:52
  SPEAKER_00: But I I think uh generally what you see in the market is people opt for a uh line of credit uh because they have that stability of the maximum they can kind of borrow while only needing to take out, let's say, five or ten K, whatever they might need.
• 7:06
  SPEAKER_00: So it gives them that flexibility more.
• 7:08
  SPEAKER_00: But you do see people go for the invoice finance option as well.
• 7:12
  SPEAKER_01: Okay.
• 7:13
  SPEAKER_01: Now that we've touched on uh those five types of loans, right?
• 7:18
  SPEAKER_01: Let's talk about from the lender side what do lenders look for when someone is applying for a loan?
• 7:25
  SPEAKER_00: That is a great question.
• 7:26
  SPEAKER_00: So, look, um with my background being in business lending um and working for a lender, I can definitely kind of uh give you a good idea that one of the most important things is cash flow.
• 7:38
  SPEAKER_00: You need to be making repayments comfortably, and so there's a certain level of cash flow that lenders want to see.
• 7:45
  SPEAKER_00: You know, they don't like to see lumpy income.
• 7:47
  SPEAKER_00: It needs to be consistent month on month, roughly around the same, and ideally trending up.
• 7:53
  SPEAKER_00: I mean, who wants to see it trending down, right?
• 7:55
  SPEAKER_00: So you want to see it going up, and a lot of lenders will look for that.
• 7:59
  SPEAKER_00: If the income is trending down, that's definitely going to be an issue.
• 8:04
  SPEAKER_00: Now, what you can do is some lenders will consider if they can see in the past, maybe last year there was a time sales were down, and they can see this year it's roughly around the same as well, and sales are down around this time, but they can see last year it picked back up.
• 8:21
  SPEAKER_00: Some lenders actually will make concessions for that.
• 8:24
  SPEAKER_00: But of course, you want to speak with your broker about how to kind of go about that, and that'll be a conversation between them and the lender to really uh get that across the line for you.
• 8:34
  SPEAKER_00: Okay, and another thing uh I do want to mention is actually um there is minimum uh trading history generally.
• 8:41
  SPEAKER_00: You want to look to six to twelve months of consistent trading.
• 8:44
  SPEAKER_00: Um, sometimes most lenders will take six months as a minimum, and uh startup capital, it's a completely different thing.
• 8:52
  SPEAKER_00: But you know, for cash flow uh business loans, you want to be looking for at least six to twelve months.
• 8:58
  SPEAKER_00: Um also I'd say that security is you know generally required for larger loans.
• 9:05
  SPEAKER_00: Um but you know, it is considered optional with non-bank lenders generally.
• 9:10
  SPEAKER_00: Um you can find that if it's a larger loan, maybe above 250, they'll start to want some form of you know guarantee, um, whether that'll be property or another shareholder, uh, that can all come into play there.
• 9:23
  SPEAKER_00: Uh, but in general with unsecured loans, if it's a lower amount, you're not going to need that type of security, which is a good thing about it.
• 9:30
  SPEAKER_00: Um as long as your credit history is up to uh up to par, then you shouldn't have too many issues.
• 9:35
  SPEAKER_01: Yeah, so with the credit history, do they look at the business's credit history or do they look at the uh owner's credit history as well?
• 9:42
  SPEAKER_00: That's a that's a great question.
• 9:43
  SPEAKER_00: So well, like generally they look at both.
• 9:45
  SPEAKER_00: Um so they'll look at the personal and the business credit scores.
• 9:49
  SPEAKER_00: Um when it comes to making the decision for the lender, uh looking at both kind of gives them the overall picture of the profile of the applicant.
• 9:57
  SPEAKER_00: So if they do have, you know, maybe a bad business credit score, but a higher personal score, you know, they can kind of question the validity of the business.
• 10:06
  SPEAKER_00: Um I I think generally if you have no issues in either, then it's much better in your favor.
• 10:13
  SPEAKER_00: Um, but there are things, you know, like personal debts are taken into account separately than business debts.
• 10:19
  SPEAKER_00: So it is on a case by case basis for the lender to assess.
• 10:24
  SPEAKER_01: Okay.
• 10:25
  SPEAKER_01: Thanks for thanks for enlightening us, uh Nathan, honestly.
• 10:28
  SPEAKER_01: No problem.
• 10:29
  SPEAKER_01: Yeah, I was definitely enlightened.
• 10:31
  SPEAKER_01: Now, now let's come back to the topic of a finance broker.
• 10:35
  SPEAKER_01: Yeah.
• 10:36
  SPEAKER_01: And uh why should a potential client go to a finance broker as opposed to going to a lender directly on their own?
• 10:46
  SPEAKER_00: Yeah, so look, I mean, you can go to the lender, right?
• 10:50
  SPEAKER_00: Um, they might help you out, they might do a great job, and you know, at the end of the day, you might get the deal across the line.
• 10:56
  SPEAKER_00: And if you go to a broker, the difference is they already have connections with that lender.
• 11:02
  SPEAKER_00: You know, they know the kind of uh BDMs there, and they kind of talk regularly.
• 11:07
  SPEAKER_00: At the end of the day, the broker's on your side, right?
• 11:10
  SPEAKER_00: So not only do they have access to multiple different lenders, as opposed to just, you know, you going to one one at a time, uh, the connection that the broker has to the lender already can oftentimes help get that deal across the line.
• 11:22
  SPEAKER_00: Whereas if you went direct, it might be treated a lot more uh harshly than it would if you went to a broker.
• 11:31
  SPEAKER_01: Makes sense.
• 11:32
  SPEAKER_01: So what would you tell to a client that uh you know calls you or a client that you're talking to tells you, oh I don't need a broker, it's gonna go to a bank.
• 11:44
  SPEAKER_00: Yeah, well, I mean, look, uh it's interesting that you say that.
• 11:46
  SPEAKER_00: Um a lot of clients, you know, they do want to they they look for the bank and then uh they kind of see the wait times and end up going back to the broker.
• 11:55
  SPEAKER_00: Uh because when it comes to traditional banks, uh you can be looking at uh maybe four, six weeks um of processing time for your application.
• 12:06
  SPEAKER_00: Uh a lot of people, especially uh small businesses in Australia, don't have that type of time.
• 12:11
  SPEAKER_00: Um so you see them kind of come back.
• 12:14
  SPEAKER_00: So I look, I I'd say ultimately if they want to wait and you know they just want to go to one bank, you know, they can do that.
• 12:20
  SPEAKER_00: If they want multiple options and they want better service and generally they want a faster uh outcome, going to a broker is generally optimal.
• 12:30
  SPEAKER_01: All right, Mr.
• 12:31
  SPEAKER_01: Broker.
• 12:32
  SPEAKER_01: So as a broker, Nathan, give give me some quick tips.
• 12:36
  SPEAKER_01: Or uh uh actually, not me.
• 12:38
  SPEAKER_01: Give the listeners, your potential clients, some quick tips.
• 12:42
  SPEAKER_00: Yeah, well, look, um, there's a couple things I can uh I guess give you.
• 12:46
  SPEAKER_00: Uh one thing is it's so important when they're assessing the business loans, you know, they will want you to have your financials up to date, you know, things like your BAS, your profit and loss, uh, age payables and receivables.
• 12:58
  SPEAKER_00: Make sure everything is up to date.
• 12:59
  SPEAKER_00: It's very important because that will be looked at.
• 13:03
  SPEAKER_00: Um also make sure that you apply before the cash flow is critical, right?
• 13:08
  SPEAKER_00: So a lot of people, uh, their cash flow starts to get very, very low.
• 13:11
  SPEAKER_00: And then they apply for funding and they get declined.
• 13:14
  SPEAKER_00: It's important to kind of, as I said, you know, know exactly how much you need and why.
• 13:20
  SPEAKER_00: And that will essentially stop you from applying too late, and you will be able to get funding when you need it.
• 13:27
  SPEAKER_00: And not needing to wait till it gets too low, get declined, you're in a much better position if you apply earlier.
• 13:32
  SPEAKER_00: So, one of the best things I can I kind of give in advice is it's important to you know get a broker's advice early to save time and money in the long run.
• 13:44
  SPEAKER_01: You heard that, ladies and gentlemen.
• 13:46
  SPEAKER_01: Get the broker's advice early to save the money.
• 13:50
  SPEAKER_01: That's right.
• 13:51
  SPEAKER_01: That's right.
• 13:51
  SPEAKER_01: And time.
• 13:52
  SPEAKER_01: Save money and time.
• 13:54
  SPEAKER_01: I mean, I guess this episode's been quite um enlightening when it comes to business loans, Nathan.
• 14:01
  SPEAKER_01: And uh ladies and gentlemen, Nathan's voice, you know, that rough manly voice.
• 14:06
  SPEAKER_01: I'm sure I'm sure a lot of his uh a lot of the ladies listening to this podcast love the voice.
• 14:13
  SPEAKER_01: Uh yeah, you get a lot of uh lady listeners.
• 14:17
  SPEAKER_01: Uh yeah, I've I've spoken to a lot of girls when I was younger, and they've I've asked them what they like about guys, and a rough manly voice was uh in the top ten list all the time.
• 14:28
  SPEAKER_01: Well, there you go.
• 14:28
  SPEAKER_01: You uh you heard of your first folks.
• 14:30
  SPEAKER_01: Yeah.
• 14:34
  SPEAKER_01: So thanks for that, Nathan.
• 14:36
  SPEAKER_01: And we'll definitely be doing a lot more podcast episodes with Nathan.
• 14:40
  SPEAKER_01: Uh so before we close off this episode, Nathan, is there anything else you'd like to touch on?
• 14:47
  SPEAKER_00: Yeah, I mean, look, ultimately, as I said, it's important to contact a broker before you know things get uh too critical to save time and money.
• 14:55
  SPEAKER_00: Um, and if you did want to reach out, you know, feel free to uh give me a call or uh send me an email.
• 15:02
  SPEAKER_00: Um that's uh you should be able to contact me as well on LinkedIn.
• 15:06
  SPEAKER_00: I am available there as well.
• 15:07
  SPEAKER_00: Um so feel free to get in touch if you have any questions as well.
• 15:10
  SPEAKER_00: I'm more than happy to talk about it.
• 15:13
  SPEAKER_01: All right.
• 15:14
  SPEAKER_01: Do you also want to share your social media handles for the ladies now?
• 15:18
  SPEAKER_01: Are you single, married in a relationship complicated?
• 15:20
  SPEAKER_01: What what's what's listen, listen, listen.
• 15:23
  SPEAKER_00: I'm I'm single.
• 15:24
  SPEAKER_00: I'm single, all right, ladies.
• 15:25
  SPEAKER_00: I'm single.
• 15:26
  SPEAKER_00: But uh don't don't all don't message me all at once, okay?
• 15:29
  SPEAKER_00: Please, please.
• 15:31
  SPEAKER_00: One at a time.
• 15:32
  SPEAKER_01: Uh all right, guys.
• 15:34
  SPEAKER_01: So uh that's Nathan from TFS, and today we spoke about business loans, uh, what you need to do, what to be aware of, and whatnot.
• 15:43
  SPEAKER_01: And if you are looking at getting a business loan, you can contact Nathan directly.
• 15:48
  SPEAKER_01: You just have to call up TFS, call our hotline, ask for Nathan, and he can help you out.
• 15:52
  SPEAKER_01: Or you can send an email to connect at tomorrowfs.com.au.
• 15:58
  SPEAKER_01: Tell us what you want, or you can just send the heading saying need to speak to Nathan, give us your contact details, and Nathan will get in touch with you to help you.
• 16:08
  SPEAKER_01: So, yeah, with that being said, that's another episode of the TFS uh wealthcast wrapping up, and we'll catch you guys on the next episode.
• 16:16
  SPEAKER_01: Cheers.
• 16:17
  SPEAKER_01: Thank you for tuning in to another episode of the TFS Podcast where we turn knowledge into action and big goals into real results.
• 16:27
  SPEAKER_01: Now, don't forget to like and subscribe and share this episode with someone working towards their next financial step.
• 16:36
  SPEAKER_01: Now, with that being said, until next time, keep building.