HOW PRIVATE FUNDING CAN HELP YOUR BUSINESS BREAK THROUGH LOCKDOWNS

Getting your business out the other side of the pandemic

Overall Australia fared quite well in the initial stages of the COVID-19 pandemic. But we’re now seeing the Delta strain proving to be a persistent challenge for our communities. Sending many states across Australia into lockdown once again.??

Following 18 months of uncertainty, businesses are feeling the pinch now more than ever. While Jobkeeper was a saving grace for many last year, the level of government support this time around has been drastically reduced, and economic opportunities have slowed to a crawl at best for many industries. Even in areas that aren’t in lockdown a slowdown in trade and tourism is having considerable impacts on the bottom-line.?

For many business owners, surviving this period will be the greatest test of their lifetime.?

Opportunities are on the horizon – BUT YOU NEED TIME!

We’ve seen with recessions in the past, the businesses that can get through it intact, often come out the other side with an array of golden nuggets and opportunities to take hold of.?

But that doesn’t mean much if you can’t survive the here and now. Few businesses can survive extended periods of low turnover let alone have enough juice left to trade when conditions ease. So, what are some smart things you can do to get through to the other side with your business still operational??

We have a fantastic eBook called The Cashflow Guru, that gives some great insights into practical steps you can take right now, to improve your cash flow. One of those practical steps is to get access to funding with favourable payment terms so you can keep trading. In this climate, the most valuable thing you can do for your business right now is to give it some breathing space and to give it the opportunity to reposition itself for a successful exit out of the pandemic. Fortunately, there are excellent funding options available to you right now that does exactly that.

What finance options are available to you??

One of the most cashflow friendly finance options available to you in the current climate is a secured business loan. The banks, however, are slow and reluctant to issue funding for a business with no or reduced income. This is where private funding could be a really smart choice.?

Like a bank, a private funder will use property that you have as security to lend. The benefit of opting for private funders is that they are much quicker, far less strict, and don't need financial forecasts. They don't look at your credit score, and instead take a high-level look at your business and the health of it, as well as considering what property security you have available to lend against.??

If you own a property with a loan to value ratio (LVR) more than 50% of the market value you have the opportunity to release some of that equity to help with your cash flow. Most of the good private funders we work with here at UCapital will often work on a 75% LVR.?

For example: if your property is worth a $1mil and you owe $500k on it, technically speaking you have $500k of equity in the property. Our funders will go up to 75% loan to value ratio of your property, so they can give you an additional $250k to bring the total exposure to $750k.?

The benefits of private funders?

While private funders can be a great alternative to the banks, as experienced professionals in the lending space, we know not all private funders are equal. So it's vital you choose the right private funder for your needs. Here at UCapital we've done the research and have the relationships with good private funders that can help you with funding, and that have enough money to assist with what you're looking for.?

Some of the benefits of dealing with a good private funder include:

• Low doc application - which makes it far less difficult to access finance when compared to the bank.
• Fast access to cash - we can have you funded within 1-2 weeks.
• Capitalise interest payments - for a period of 3 to 12 months. All we need is an exit strategy at the end of the 12 months of how the loan will be paid back. The exit could either be paying for it from company profits, the sale of another property or in many cases it could be refinanced to another funding source.
• Cash injection when you need it - a secured business loan tends to mean you can realise a large amount of money to inject in your business to buy time to survive this COVID lockdown.

By opting for a private funder, you can buy enough time to get through this difficult period of lockdowns. With the flexibility of not having to make repayments for 12 months, your business could not only to survive this lockdown period but come out of it in a stronger position!

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Knowing whether a loan is right for you

Putting your house or another property up as security is a serious matter and a big decision. Like any business loan, there are risks involved with a secured loan. The questions you must ask yourself are:

• Do I have enough confidence in my own ability??
• Do I have enough confidence in my business??
• Do I feel I can turn things around when restrictions lift??

If the answer is no to any of these then a loan might not be right for you. There will no doubt be some business casualties over the coming months.

If, however, you’re confident your business is sound and that it would be profitable again as soon as lockdown ends, then a secured business loan can be the breather you need to reposition yourself to come out stronger on the other end.

The team at UCapital are here to help you execute your business strategy and capitalise on the unique opportunities that will present themselves following the lockdown period.