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Business Equity Loan

Need Business Funding? Save Time and Money with Plan A.

By utilising residential properties as your business security, you can access excellent business equity loan interest rates.

However, lenders and banks would still charge you higher interest rates under business banking. That’s why seeking help from a mortgage broker will help you find lenders with discounts typically enjoyed for personal home loans.

How can I apply for business equity loans?

  • First, your loan should be dedicated solely for business purposes. That’s because business equity loans are unregulated, just like business loans.
  • You must have commercial properties, shares, or investments in your business to qualify for business equity loans.
  • To qualify for a business equity loan, you must have sufficient equity in the form of a residential property.
  • Keep in mind that you might also be required to include a second mortgage on your property and refinance your current loan to the same bank or lender.

How much funding can I loan?

With Plan A Mortgage, we can help find you reliable and secured business equity using your residential and commercial properties as your business security. With our help, you can loan:

  • As much as 100% of your residential property’s value, all at highly competitive business equity loan interest rates.
  • Up to 80% of your commercial properties’ value

If you have a residential, commercial, and investment property that you can utilise as a security for your business equity loan, call us at 1300 052 055 to know how our brokers can help.

Can I use a commercial property’s full cost in my loan?

As long as you can add another security for your business equity loan, then you can borrow the full cost of a commercial property. Most of the time, this second security would be the investment property or residence of the business owner.

For instance, say you want to purchase a business property worth $1 million without any deposit. If you have a residential property worth $700,000 with $300,000 left to pay, the lender can let you utilise the $400,000 equity to pay for a deposit for the property you want to acquire.

In that case, your Loan to Value Ratio (LVR) can increase up to 100%, giving you the capacity to borrow on the commercial property so you can borrow the remaining required funds.

Why do lenders have higher rates for business equity loans?

The increased financial risk to the banks/lenders

Launching a new business could mean a higher risk of default than applying for a standard home loan and acquiring a property. On the other hand, businesses with reliable track records could secure business equity loans faster because default risks are minimised.

Loan evaluation can take time

For personal home loans, lenders and banks would use the credit scoring system to automate the assessment process. However, business equity loans require bankers and credit managers to look into the application and thoroughly evaluate it.

Lack of competition

Because most clients and businesses rely on major banks for business loans, many are left unaware of better deals and discounts elsewhere. The lack of niche competition simply narrows down their choices to more expensive deals.

How can I find the best interest rates?

Here are three of the most important factors to help you scout the best business equity loans so you can kick off your business start-up with ease:

Seek the right bank/lender

People often make mistakes right off the bat by relying on their current bank for business equity loans. Remember that your main goal is to find a lender that will treat your commercial loan as a standard home loan so you can gain lower interest rates.

Leverage your equity from your residential properties

Your apartment unit, house, or piece of land can be used as loan security, given that you can accurately value and sell it in case of loan default. Commercial properties are not easily accepted as security since most of them are difficult to accurately value and might consume considerable amounts of time to sell.

Only apply for 100% secured loans

If your loan isn’t 100% secured, then you’re running the risk of higher interest rates or more chances of getting declined. Besides, loaning more than 90% of residential properties or 70% of commercial assets can put your loan at a significantly higher risk.

If you have a residential property that you want to capitalise on as loan security, call us at 1300 052 055 to discuss your opportunities and business equity loan needs.

How do lenders and banks evaluate business equity loans?

Banks and lenders assess business equity loans just like how standard home loans are evaluated. Not only should the applicant have sufficient security, but you also need to have adequate income to pay off the loan, notwithstanding an excellent credit score and history.

Aside from those mentioned, here are some factors of the loan application that lenders keep an eye on:

Business acquisition

Although a business owner can provide documents indicating a business’s existing income, there’s no telling whether the new owner can perform the same. Hence, banks and lenders are more conservative when evaluating loans intended to purchase a business.

Business start-up

As long as you can provide a solid business model, cash flow projection, and proof of experience in the industry, there’s a good chance that lenders will consider accepting your application.

Working capital

Banks and lenders generally prefer lending to growing businesses that are already generating profit. Businesses like these are seen as low-risk applicants since they already have a proven and tested business model and cash flow projection.

Applicant’s experience

Banks would typically lend to applicants and business owners who have reliable experience in their industry. For applicants with less experience, lenders will more likely ask you to provide a residential property as loan security.

Other complex factors influence your business equity loan assessment. To make sure you get your ideal loan with the best rates, we recommend seeking professional help with our mortgage brokers at Plan A Mortgage.

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Apply for a business loan using your equity now!

Business equity loans are generally more complex and critical than standard home loans. Since it involves higher amounts of funds and securities, it would help if you speak to an accredited mortgage broker who excels in business equity loans.

Fortunately, Plan A Mortgage has a team of specialist business mortgage brokers with experience in business loan applications.

We will help you get the business equity loan you need by finding the perfect bank or lender for you. More than that, we are more than willing to get on our way and assist you in sorting out your business finances.

Call our professional staff at 1300 052 055 to know why we’re the best team in business loans.

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