There are 1.1 million independent contractors in the Australian workforce of 11.3 million. However, Other Business Operators (OBOs) are also self-employed and make up another 1 million workers.
Money makes the world go around, but where do these small business owners find the capital to run their business, in order to put food on the table. They are not guaranteed a wage each week and, in some cases, have little or no control as to when they are paid by their customers. Yet it is expected that they reinvest back into their business week after week to keep the wheels turning
Be it the loan for the excavator, or the finance to purchase the tradie's ute, or perhaps even the cash for the indent stock orders. Business needs capital...
The question is : "at what price?" and do you "sell your soul?"
More often than not, it's not that a business is not profitable, but merely the lack of cashflow that creates the hardship. If not reviewed quickly enough, this hardship can spiral out of control as debt creates expense, and expense creates further debt.
Unsecured debt is usually much more expensive and comes with a much higher interest rate than secured debt because it is a higher risk for the lender.
Secured debt is where an asset is held as security against the loan. The lenders are more comfortable knowing that they can perhaps sell the asset to recoup the debt if you cannot repay your loan.
This said, we usually recommend that you look to put up a form of security against your loan. This can be the vehicle or asset itself or if you have enough equity in your home itself, we can sometimes use this as security and secure a loan at a much lower rate. We can perhaps even extend loan terms, which makes the repayment lower,
to help with your cashflow.
There's a fine line between cashflow, profit and longevity. Understanding the cost of lending can impact where you look to find your next loan.
Get in touch with us today, and lets see how we can help you and your business stay on track to keep those wheels turning.