Growing number of businesses acquiring premises

Fundamental Business Finance director Nathaniel Flack, said the pandemic has taken its toll on local bank managers, with many quality bankers taking different positions or choosing different careers. 

“There does seem to be a reduced level of experience and skills or the authority to assess and write small business loans,” he said. “Even when finance is available, bank processes can be slow and painfully bureaucratic.”

This has led to an increase in non-bank or fintech lenders, Mr Flack said.

“Many SMEs believe they should be with a major bank, but the reality is bank policy can be difficult to navigate and fit,” he said. 

“We are seeing many quality businesses with ATO debt that banks usually won’t approve, especially as a new customer. Our focus is to develop a relationship with these businesses and build a strategy to achieve the best financing arrangements available to them.”

One of the most common strategies is investing in commercial property. Mr Flack said he has seen a growing number of SMEs choosing to acquire their business premises.

“Rather than paying a landlord an exorbitant amount in rent, a business can put a 20% deposit down on a commercial property,” he said. 

“Also, commercial mortgages can now be repaid over 30-year terms, just like a home loan.”

Mr Flack said accountants have a key role to play in this increasingly popular strategy to ensure it is tax-effective for businesses.