Commercial deals explained

by Adam Smith13 Jan 2016

On completing a needs analysis for the client, the broker confirmed the customer wanted a low rate, a lengthy loan term and a set-and-forget facility. The loan amount required was $4.3 million with a company turnover of approx. $30 million. The broker was aware the structure was complex with several trading entities and property trusts involved, however the broker wanted to establish himself as the relationship manager for the group moving forward.

The solution:
Loan was approved on a principal and interest basis over a 20 year loan term. The broker also took advantage of our low commitment fee promotion of $500 and competitive fixed rates, resulting in the customer fixing their interest rate for three years.  

The takeaway:
The appeal to the broker in dealing with ING Direct for commercial loans was that we deal exclusively with the broker in this transaction. Our structure allows the broker to maintain full control of the client relationship during the application process. Our products suit brokers looking for a variety of lending needs for their business customers including loans for mix zoned properties and child care centres for example. Our low entry costs and competitive fixed rates enable a cost-effective refinance to benefit the client. Our broker partners have confidence when referring their clients to ING Direct, aware of our industry leading customer satisfaction and net promoter score (or customer advocacy).

The scenario:

Thinktank was recently able to help two brokers. The initial transaction from Broker 1 was a $2.3M refinance and debt consolidation for an owner-occupied manufacturing business in QLD at 75% LVR. Broker 1's customer then saw an opportunity arise to sell the business, retain the underlying property and rent it out on commercial terms to the purchaser. However, the debt consolidation and refinance would still be required. Broker 2 initially approached a major institution on behalf of their client seeking assistance with finance for the business purchase which was to be completed through a combination of borrowed funds supported by their own commercial property and vendor finance. Unfortunately, the bank subsequently advised it was unable to assist. However, with the comfort gained by Broker 1 and their client, they referred the purchaser to Thinktank. Broker 2 then engaged Thinktank’s assistance to concurrently re-finance the purchaser’s existing loan and provide cash out to support the business purchase.

The solution:
Broker 1 client: Thinktank provided a 75% LVR, 25-year set and forget loan term to consolidate facilities and fully retire any residual creditors of the business being sold. This importantly allowed the client to simplify their liabilities into a single, easily managed long term investment loan.

Broker 2 client: Thinktank was able to refinance the existing loan for the incoming entity and provided equity release sufficient to complete acquisition of the business. An initial interest only term of 5 years was provided so as to minimise the cash flow implications from the higher debt level, including provision for the vendor finance terms (three years P&I repayment), thereby allowing the purchaser sufficient working capital and free cash flow to consolidate and develop the new business.

Each of the facilities for the respective borrowers were documented on set and forget terms over 25 years with no annual reviews, ongoing fees or compulsory revaluations.

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