Branching Out - Resimac

Quick cash,
long-term
gains
Story / Francis Wilkins
clients with short-term loans don’t warm
to lenders’ rates, but they may bring extra
business to brokers who treat them right
Short-ter m loanS are typically needed
by businesses experiencing a temporary cash
flow problem or that need an injection of working
capital or funds for items such as a deposit for a
commercial property.
Borrowers can use property (including
residential), vacant land and other assets as
security, but the purpose of the short-term loan
needs to be business-based (although under law
this has not always been the case).
Short-term loans therefore can’t be written for
private individuals who want to purchase property
for personal use.
Longer-term buSineSS
But brokers should not automatically rule
out writing these loans as part of their
client proposition. A short-term borrower
may well soon want to refinance or have
other borrowing needs – you can help them
meet these if you establish a solid relationship at
the outset.
“You’ve got a good proportion of brokers who
write residential loans, and that’s all they write,”
Short-term finance / feature
says Andrew Littleford, managing director
of Interim Finance.
“Pretty much their expertise is quarantined
in those areas, but if they take the time to
understand what can be written and how it
can be written it can be an adjunct to what
they’re doing.”
“You wouldn’t be with a short-term loan longer
than two or three months,” adds Andrew Evans,
chief executive officer at Australian Investment
House. “Then, you diversify into all the add-ons
– the private mortgages, the first and second
[mortgages], which are cheaper.
“I try to avoid [the short-term option] and get
the client a better product by thinking laterally
– whether I need to go to a six or 12-month
term, which I can do for about 9.25 per cent per
annum. The cheaper option for the client is always
my preference.
“Know your market, know your clients and
do the right thing for your client,” he says. “There
are certain times when people need short-term
funding, but they’re few and far between as
opposed to mainstream [funding].”
branching out / 43