I am a small business owner. I need a cash injection of about 20k to expand my business? What is the best way of doing this, redraw on my home loan? Take out a new business loan? What are the various costs and implications? Thxs

Hi Stephanie,

It's tough being a small business owner so well done you!!! I hope business is going well for you.

The cheapest way is to use the redraw on your home loan. Depending on the home loan you have now, you may be able to create a $20,000 split. t's easy then for accounting purposes to differentiate between the business and home loan. Home loan rates are under 5% at the moment. If you stayed with your current lender costs would be minimal. Under $500.

Other business options include an overdraft and a business loan. There is not one clear answer on rates for commercial and business loans. Banks calculate a different rate depending on various factors: if the loan was secured against anything (term deposit, property) time in business, asset position, cash flow, business financials and actual loan amount etc but in most cases for commercial you would be starting from at the very least 5.5% and above. Costs will include valuation fee, legal fee, application fee and again this varies from lender to lender

Some commercial lenders do have specials at the moment (I have had a quote recently for mid $400's) but as each scenario for commercial is so unique it's more difficult to give you a definitive answer.

Hope this helps in any case!!
Enjoy your Saturday.

Nicole :)

Good morning Stephanie.
In addition to the answer already provided there is another finance alternative called debtor financing.
Whether you qualify for this depends on the type of business you have and if you run a debtors ledger.
With this type of funding you hand the invoices you have raised to the finance company who generally pay you 80% of the face value.
Debtors then pay the invoice value in the usual 30 days, not to you but to the finance company.
In turn, the finance company pays you the balance of the 20% less there cost (interest).
The main benefit from this form of funding is your ability to turn it on or off as required.
You are only paying for the money you are using.
It is always advantageous to investigate all of your options.
Good luck.

Hi Stephenie,

I would be seeking advice from your accountant 1st before doing anything like redrawing. There are a number of ways you can access the cash injection however of not structured correctly could have a negative effect/impact on things like tax deductibility especially if this is for business purposes the interest of the money used 'could' be tax deductible etc. remember this forum is very general advice and you should seek advice specific to your needs from a qualified person in that area. it's more than just getting the money from somewhere. be careful just redrawing the money or unlocking the equity etc. You certainly would want to separate it for accounting purposes.
General advice only - please seek or speak to your accountant 1st.
hope this helps!
Adrian.

Hi Stephanie, I can organise a loan that will allow you to borrow against the written down value of any assets in your business. Financials are not required and it can all be done in a few days. Give me a call if you need to know more. Repayments on $20K over 3 years would be approx $700 per month. Cheers Michael