Who is on the borrowers’ side? Bank debt consultants, for sure!

On the Australian Bankers Association website is a bank-friendly warning from ASIC, the so-called corporate regulator, about what they call “Debt management firms” who help borrowers manage their debts. Most Aussie borrowers don’t have debt management skills and banks take advantage of that. The warning says:

“AFCA and consumer groups continue to raise concerns with ASIC about the conduct of debt-management firms and the potential harms these entities may cause consumers, including that they may provide unsuitable services and engage in predatory conduct” – ASIC.

It all depends on who runs those firms.

What do Aussie borrowers need?

The “unsuitable” services, from the ABA viewpoint, that bank debt consultants might provide are to:
make the banks write off debt caused by predatory dishonest lending practices,
make banks share the suffering from deliberately trapping Aussie borrowers in unaffordable debt-traps,
make the banks give borrowers a repayment holiday when the industry or the economy go through tough times
help the borrowers increase their profits with cheaper loans, to clear their debts earlier.

The big bank protection racket

Banks have the opposite priority to borrowers. What makes the bank rich, makes the borrower poor.

Government too has the opposite priority to business borrowers. It seeks an expanding economy where money moves around and around to primarily create employment then end up in the government coffers through taxes. Business owners borrow then spend the money running the business with the suppliers, staff, marketers etc who spend the money again and so on and so forth.

Aussie borrowers however lose profits through interest they pay, but still need to earn enough profit, or surplus cash, to repay their loans. Otherwise they have “forever” debt and end up working for the bank and the government for life.

Bank debt consultants show borrowers how to retain as much of the money that comes in, as they can, to clear debt early and really enjoy running the business they are skilled at, instead of working day and night under increasing pressure from a rich bank.

Whoever pays the piper, calls the tune.

AFCA, ASIC, ACCC and the Bankers Association work against bank debt consultants obtaining fairer loans for borrowers, investigating inappropriate bank practices and generally helping Aussie borrowers who have been lied to, misled, cheated, defrauded or robbed by the bank. As bank debt consultants for many decades, with their own accounting and family business experience, the GBAC consultants don’t apologies for making billionaire banks write off dishonestly obtained debt to help Aussie families struggling with a cost-of-living crisis, housing crisis and not knowing whether the economy is going up or down.

While banks make billions-Aussie loan seekers look around

Banks are counting up their money

Banks are counting their half year profits in billions. They have so much spare cash that they don’t know what to do with it. Loan seekers are looking around to see how they can share in those billions. They are they working with their banking consultants to see how they can keep their businesses and farms secure and profitable by obtaining better loans. Sadly they often rely on people who are not really working for them at all – like bank paid brokers and counsellors. While loan seekers look for funds to expand, banks buy back their own shares to use up some of their surplus profits.

Loan Seekers want the Honey

Farm loan seekers face a trifecta of major challenges with seasons, commodity prices and government policies driving many to distraction. But they want the honey – the sweetest loan they can get. Getting the honey always takes a bit of effort but it is worth every bit. The easy way to get the very best honey flavoured farm and business loans, is to spray a bit of smoke around and put the bankers into competition with each other. There is an Aussie farmer/accountant who ran his own businesses, sheep and cattle and thinks that banks should be a lot fairer to their loan customers. His farm loan seeker website puts the banks & other lenders into the financial sale yards of www.farmloanseekers.au to see what offers they can come up with when competing against each other for the farmer’s business. Bankers sure can sharpen their pencils when they want the business!

Experience Counts

Business loan seekers too need the very best loans, not just on rates and charges, but terms and conditions as well. GBAC founder Greg Bloomfield ran businesses in real estate development and equipment hire. He joined his first public company board when he was 21. He was a Fellow of the Institute of Directors by 24, just before qualifying as a Chartered Accountant, CPA and company Secretary. He bought is first sheep property in the 1980’s and moved to cattle in 1990. Greg knows that the best family business security comes from having lenders compete for the loan business through www.businessloanseekers.au and having a consultant to whom your financial security is the absolute top priority.

It is staggering the number of businesses and farms that get wound up or closed down without ever seeking assistance with their loans and cash crises. GBAC has been doing that for half a century. It works partly because clients only deal with the bosses.

Cost-of-living crisis

Cost of living a burning issue

Cost-of-living crisis is top of mind of many Aussies in recent times. Top of the list are late loan repayments.

Loan Default

Default is what a borrower does when they fail to meet loan contract terms due to late loan repayments. It is usually caused by a cost-of-living or cashflow crisis. Late loan repayments causing a borrower to default on the loan agreement often result in the whole debt becoming due immediately. That can then lead to the home, farm or security property being sold up by the bank to clear the debt.

Cost of living causes problems for borrowers.

Many borrowers faced with lack of cash seem to hope the problem will just “go away”. It doesn’t! It is best to stay ahead of the game and initiate a call to the bank. If you are a business owner or farmer contact GBAC if you would like us to negotiate with your bank and or other trade creditors to give you breathing space. Mostly they will all help you once they know you have professional assistance and are doing your best to meet the loan terms. From a pure business perspective, they do not want to lose your business. They just want to know you are doing your best to fix the problem with professional guidance.

In one case we were called in to save the family home of a couple with three children. The bank was about to have the home auctioned. We had to move fast to deal with bankers, lawyers and sale trustees to prevent the sale and get the loan back on track.

Move fast for the agreement to last

In almost 40 years we have helped those who for one reason or another cannot make loan repayments on time. We have found very few cases where we cannot persuade the bank to give borrowers a break. Re-negotiation can restore loan repayments and continue the loan to its full term. The same applies to trade creditors.

Trusting trusts and inherited debts

In the 1960s and 70s, Trusts were used a lot for what was then called, “Estate Planning”. Changes in tax, land tax and family law have removed many of the benefits for owners of small and medium sized businesses . Trusts in estate planning can often see the next generation facing unfathomable complexity. It can be even worse if a consultant has suggested that a bank loan should be acquired by the younger generation to buy out their parents. Then inherited debt is added to trust complexity ensuring the need for expensive advisers to handling accounting and tax obligations each year.

Business owners should carefully weigh up the pros and cons before letting advisers set up trust for them.

Trusts set up for taxes and duties

The great advantage of the trust is that nobody actually owns the real estate or money, though someone is trustee or controls the company that is trustee. Death does not trigger death duty, because the business or home is not owned by anyone. But as there is no death duty that is largely irrelevant, though if it was introduced it might then be to late to wish there was a trust. Capital Gains Tax (CGT) may apply not apply either if the assets have been held for long enough and the transfer is related to retirement. Obtaining specific advice for each family situation is vital. General advice cannot apply to any individual situation without specific modification as applicable.

Many family businesses are handed on to the next generation. The same may apply to homes given the housing crisis inflicted by federal immigration policies, so a trust holding the title would suit. But, if there is no death duty and CGT does not apply, the advantage is not so obvious even from a tax viewpoint. But involving a bank in a succession plan can lead to the burden of inherited debt on the next generation

Estate planning that retains control

What a trust can do is allow the older generation to control what the younger generation does in the business. That is not always wise. Young people need freedom to innovate and make mistakes of their own. That is how we all learn.

A trust used to be a way for a family, handing on the business or home to the oldest son, to ensure that in the event of a marriage split-up, his wife or partner would not end up with a share of the home or business. Family law seems to have scuttled that idea and many would say that is a good thing.

Skip DIY when succession planning

Families business owners should obtain professional accounting and legal advice to determine what happens to the business and its assets. They should learn whether or not it is possible and if so, how the succession plan should be structured. Each family situation is unique so this is not a field for DIY on the basis of a note like this or any other. “When in doubt, find out!”

Danger of using trusts for succession planning

The danger in trusts, is profits distributed to family members to minimise tax rates, are often not paid out to the beneficiaries in cash. Rather, those profits may credited to them but reinvested. However, the money distribution belongs to those beneficiaries. Parents need to be aware of the risks of them using that money without written permission of the beneficiaries.

Complexity can be a major disadvantage of a trust deed. It can cost more in legal and accounting fees to eventually unscramble the trust structure. The results may yield no tangible or financial benefits in doing so.

Sense of achievement

Rather than give the business to the next generation it may be better for all parties to consider selling the business to the children or one child. That way the child gains the satisfaction of obtaining the business through their own efforts rather than as a gift. The parents benefit by having cash to spend after years of pouring it into the business. There are very good ways of doing all of this without involving bank debt. Not handing over debt to the children is fairer .

Why try GBAC?

Big professional firms, those associated with business organisations, banks or government are not necessarily appropriate for succession planning due to conflicts of interest. They are often very expensive. Succession planning should protect businesses from banks and government.

Greg has managed transfers, succession of a major business from his grandfather and a farm that was settled by his great-grandfather, to his generation. Greg and Pat have both been involved in running business and consulting.

In a world of excessive greed, GBAC lets clients say goodbye to that greed and hello to good old-fashioned service. That is where the client comes first and foremost and always deals with the principals.

Family farms and succession planning

Start a succession plan early

Succession planning comes up when mum and dad are looking to the future of the farm and want to leave their legacy to the next generation of farmers. It may start when the children are in their teens or be left until they are in their 50’s. The earlier the better, but flexibility is important for the plan to succeed.

The end goal of the succession plan

A one size fits all approach does not generally suit and handing over debt to the next generation increases the risk of the farm eventually being lost to the bank. Main factors to consider are the goals of the parents and children. That sets the pattern, but within those boundaries will be many complex issues, including relationships, finances, taxes, mortgages, competition amongst children and differing views of mum and dad.

Family conferences help

First step is discussions with each family member. This includes a sound understanding of the farm, its operations and finances and patient family conferences where people are encouraged to put their thoughts on the table. This should not be done as a final statement, but to open discussions. We really try at GBAC to get this right. Because, if handled badly it could make some family members feel badly done by.

Avoid surprises that could cause consternation

Succession planning needs gentle diplomacy. Often some family members have expectations that others don’t share. In the end we want to make everyone happy. That is why if Succession planning starts in their teens or twenties, everyone has a clear understanding of what is happening and most wishes can be accommodated over time.

Our role

What has helped us with succession planning for clients is experience. From my teens I was raised on Dale Carnegie’s book “How to win friends and influence people”. It gave me a different perspective on working with client families. What I learned about dealing with finances in my Chartered Accountancy courses. Running my own Merino property out west first was a good lead in to me succeeding my 2^nd cousin by purchasing from him the beef cattle property in the Araluen Valley out of Braidwood, originally settled by my great grandfather.

Farm or business debt needs caution in uncertain seasons

ABARE executive director Jared Greenville completed a recent article for farmers on volatile seasons with these words:

“Rather than growing the size of the enterprise or productivity by much, they’re setting the business up to manage the downside risks by simply not being as eager to borrow.”

These are wise words because the future looks quite risky when it comes to refinancing. But it is not only farmers who need to think carefully. Family businesses are under threat from climate change, the economy and big business. It pays to reduce risk in times like this to avoid a major disaster if things go wrong. Recession is looming in many places. The best way to minimise risk is to look for ways to relieve cost pressures. Debt relief would be one of the first. A perfectly happy loan can morph into a dangerous debt in just one or two years. That can also happen when banks appoint receivers to manage the business or farm.

Banks have been very lenient to borrowers since Covid. There are signs that they are starting to lose patience with loan defaults and look to recovery action like receivership. The current boom in prices of real estate has been partly caused by a decade-long boom. Banks seeking to recover debt, may seek to sell mortgaged properties before the boom busts. Many small business loans are secured by a mortgage over the business owner’s home

“Borrowing in good times; Refinancing in the bad”.

The annual Profit and Loss statement often shows banks earning more out of the enterprise than the business owner or farmer. A business loan consultant would know that dangerous debt can be reduced by a variety of means. The sale of an unproductive block may be one way. A write-off by a bank that has treated the borrower badly might be another.

Debt refinance can allow a farm or business loan to be cleared much faster or managed more easily. Borrowers coming to GBAC find, that negotiations with the bank can sometimes yield them more profit than they have earned for years in the business or farm. That particularly applies to those who have been tricked by the bank into unaffordable debt.

In running my own equipment and art hire businesses in Sydney I paid very close attention to my loans and creditors. Developing techniques and strategies with Profit in mind was the main goal. That is because profit is the main way of clearing any business debt.

Business or Farm Debt Refinancing

To make sure business owners, including farmers, get the right loan at the right price with the right loan terms we invented the “Farm Loan Seeker” (FLS) service four decades ago. Today it is an electronic means of borrowing without using an expensive bank-paid mortgage broker that just adds big costs to the loan. When a bank pays a broker up to $10,000 in brokerage to deliver customers on a plate, it expects to make a lot of money out of them. My view is to keep the total borrowing costs as low as possible. Business and farm borrowers can do their own loan hunting very successfully online with an FLS. The inexpensive FLS comes with a guide on dealing with the bank to get the best deal. GBAC will provide inexpensive optional support for various parts of the process if needed.

Borrowers should not assume that the people offering them a loan will look to their interest before their own, any more than the person buying from them will. People look after their own interests first. The Farm Loan Seeker we originally invented in 1987 when banks were first de-regulated. As well as helping other business owners get a fair go from the banks, I was running my two hire companies and a sheep property at the same time. A borrower should never trust the lender to do all the work. Lenders can be ruthlessly efficient at looking after their own interest. That often means agreements that put the borrower at a disadvantage.

Refinance Risks

Why refinance can have risks.

Refinance risks can vary, depending on a wide variety of circumstances. That is because a person who is refinancing is sometimes under more pressure than before. If refinance is not arranged within a specified timeframe, the existing bank could threatening receivership, appoint a manager or foreclosure and sale at auction. The borrower is looking for loan relief.

The best way to deal with that problem is to turn the tables on the bank from whom one is refinancing, by researching its behaviour to identify where it broke the law, the code of conduct or fair trading laws and then sitting down and telling it some home truths about what happens when you raise that by Votergram to some 225 Federal Politicians

Assessing refinance risks by comparing loan repayments against farm profit

“Generally, farmers’ confidence in the agriculture sector drives the demand for debt to fund land and capital acquisitions,” a banker said recently. The average farm profit was reported as $29,000. While many small country roads businesses are not so vulnerable to weather and commodity prices, many are with our major cities somewhat dependent on beach weather. Recent floods have devastated many businesses. Often such disasters dramatically reduce the security value of a mortgaged property. That is the ideal time to start gentle negotiations for the bank to write off a good bit of the debt. When the debt is reduced, the chances of refinanced are enhanced. Those who have played their cards right will often find themselves refinancing a much smaller debt. That is converting risk into advantage.

A Borrower’s Budget

It is vital for farmers and business operators to find out exactly how many dollars a year they will pay in loan repayments. Then compare that to their budgets. Make certain that the budget reflects the current reality rather than a fairy tale invented for a bank. Loan repayments and interest have to come out of profit. It is rash to think that the farm loan or the business loan will produce extra net profit. It often does no such thing and even if it does, it usually takes a few years to do so. A borrower’s budget is their best friend. It should regularly compared with the same period in the previous year and the actuals in the present year.

There is usually a big difference between the total income or turnover of the enterprise. Profit is the bit left after expenses. Loan repayments must be made from Profits. Don’t be misled by turnover!

Refinance Options

The problem is that a even a loan refinance can quickly turn into a debt trap. This can happen with a couple of bad years if the economy crumbles or flood waters cut business. My first reaction when confronted with refinance or even original loans has always been to see farm in drought if it is possible to achieve the same result without borrowing from a bank.

Over the years, I have shown farmers a variety of alternatives, from savings, to interest-free loans and trade-offs.

Assets can be acquired without getting the bank involved. Publicised interest rates and charges are not the best that can be achieved when borrowing. Offers of special rates and reduced charges requires negotiation. Those wanting to borrow on best terms and conditions, the “FarmloanSeeker” or “FLS” targets an enquiry to a range of banks. It is an easy way to check out what is available. Then negotiate the very best and cheapest loan possible.

Debt help!!

The need for Debt help

This year CBA will earn 10,000 times as much in real money terms as it did before bank de-regulation. The banks are pulling in massive profits just as their customers are drowning in debt. Why? Because the banks have been marketing their mortgage loans to borrowers with big asset backing and those borrowers are now drowning in unaffordable debt as the bankers knew they would. But in the process the banks have often broken the law and the Code of Banking practice as well as fair trading regulations, all of which the recent Royal Commission identified, but did not compensate borrowers for the damage done.

Traditionally we individual Aussies trusted the banks and put up with the way in which they treated us. That was because there was not much else we could do. To fight a bank in court could cost millions.

GBAC has found that by analysing and researching facts, figures and bank behaviour it often turns out that the borrowers have been deliberately tricked into loans with impossible terms that the borrower did not read. The banks often banked on that, particularly with busy family business owners and farmers who were more skilled in their own enterprise than borrowing and just trusted the banks to do the right thing. Prior to de-regulation the bank would have done the right thing.

Turbocharged Voter-Power for borrowers

Today mortgage borrowers, in their role as voters have great sway over government because GBAC realised that Parliament controls the bureaucracy which delivers government and the voters, control who sits in parliament.

GBAC has developed the Votergram Turbocharge system that allows each and every borrower to tell every single member of any or every Parliament, what the bank has done to them, how unreasonable the bank has been and how disastrous bank de-regulation has been when borrowers are literally robbed and financially abused so that banks can earn billions and their executives can earn multi-million dollar salaries.

Many banks faced with the option to sit down and sensibly discuss how best to deal with the debt in a way that treats the borrower fairly or have the matter discussed by the federal parliament, opt to confer with the borrower and GBAC’s negotiators for an outcome that is fair to the borrowers first. They are after all the customers and the most vulnerable party. If the bank does not act fairly the borrower with GBAC’s assistance can Turbocharge the campaign for a fair go, by Votergram for help

Today there is a completely free association of voters all over Australia. It is called the Australian Voters Network or Voters. It has no party politics and exists only to help and educate its members to persuade the parliaments to improve the fairness factor in Australian government policy. The more who join and share their own experiences, the fairer Australia becomes. It fits with the National Anthem doesn’t it? It is a good organisation for borrowers to join because it can help them a great deal when the crunch comes on.

Banks and Big Businesses Monopolies

For a long time the moneylending banks and big business monopolies have controlled government by bribing our elected MPs with election donations and bullying them with highly paid lobbyists. It looks as though the federal parliament is going to reduce that and such a move will again help borrowers in trouble with their bank.

Anyone wanting to learn a little bit more can contact GBAC which is run by a former Chartered Accountant / CPA who has run family businesses and farms as well, so knows just how hard it can be to clear big bank debts.

Democracy is the best system of government in the world, but only when driven by the voters to fulfil its potential. Government for the people comes from government by the people via their parliament. Borrowers have a great resource in their parliaments and GBAC has developed the tools to help them access it.

Join Voters now and Turbocharge your Voter-Power. Then give GBAC a call and see how they can help you. If bank behaviour has really upset you, you can go to the BankWatch site to record what happened so that it can be taken into account in submissions to government.

Greg Bloomfield

Debt Solutions for a Borrower

“The Winning Borrower”

“I was phoned one day by an IT executive, just after I had spoken to a farmer whose total crop proceeds had been seized by the bank. The IT expert had a similar problem. His bank account had also been frozen after a large deposit had been made into the account. The bank’s receiver took it all.”

So begins “The Winning Borrower”, the story of how one Sydney Chartered Accountant with a farming and family business background became a “bank loan consultant” and took on the big banks to provide Aussie debt solutions for Aussie farmers and business owners.

Baseball bats to battle bank debt issues

In the process of negotiations, mediations and refinancing, he discovered the disturbing details of how banks lied, cheated and trapped farmers in debt they could not clear without selling the farms and did the same to business owners who had mortgaged their homes. The author relates how untrustworthy banks have exploited customers in their quest for multi-billion-dollar profits. He takes a metaphorical baseball bat to the bankers, explaining how some of his clients ended up making more profit out of their loan settlements than out of farming or business.

Royal Commission investigates bank loan problems

The day the Prime Minister announced that there would definitely not be a Royal Commission into the banking industry, the author sent a Votergram to each one of the 225 Federal MPs decrying the decision. Within days the decision was reversed and the Royal Commission announced.

Author makes book free to farmers during March

“The Winning Borrower” 85 page e-book by this businessman,4^th generation farmer, Chartered Accountant and CPA , who became a bank loan consultant by accident, is available during March as a FREE e-book to help business owners and farmers all over Australia enjoy more profitable and secure lives.

Benefits of Financial analysis

Financial analysis

Business financial analysis are the last thing that gets the farmer’s attention, but are a necessary part of a successful business operation.

Measurements and financial analysis

In business we pay a lot of attention to measurements – micron, moisture, calving rate.

Yet we mostly ignore the money measurements. Frankly they are not half as interesting.

My grandfather was a Queensland drover, then bred sheep and cattle at Coonabarabran before establishing a property development and building company in Sydney.

Accounting

Before I qualified as a Chartered Accountant/CPA, when I turned 21 he invited me onto the board of his company. He gave be a set of financial statements from the accountant, to read over. They might have been written in Russian for all that they meant to me and perhaps to him. Many years later they mean more to me than measuring the micron of our sheep at Tullamore, the soil moisture in the cropping paddocks or the calf birth weights and calving rates at Braidwood.

Financial statements tell stories

Financial statements tell stories to financial analysts that they hide from others. Over one or two years they reveal a great deal about the money management side of a farm. Over a decade they provide the data that can enable a business owner to make much more money per product of service.

It does not matter whether the business is coping with downtime or debt, or enjoying the best seasons in decades. The figures reveal the secret of making more money. We work to enable us to live the very best life-style in the world. But the more money we make out of it, the more enjoyable it becomes.

Many matters depend on wise financial analysis

When we sit down with business owners to chat about restructuring, succession planning, expanding or getting the bank off their back, their past financial statements have the information needed to set them on the right track. The figures and graphs we extract, tell the business owner what they can afford and how they can best afford it. They also reveal why they might be finding cashflow very tight. An important part of financial analysis can highlight how their toil is supporting the multi-million dollar bank’s CEO’s salary.

Money in your bank account, not the bank’s.

For many, those figures enable us to put more money into the farmers bank accounts than into the bank’s own coffers. At farm debt mediation they earned one farmer $5 million. When refinancing, good financial analysis can help shave the interest rate being paid for the next 20 years. This could even eliminate the need for debt at all. Loan and debt problems are not unique to business owners, but the financial climate can turn profits into losses overnight. Some commodities have a very short “self life” like consumables.

Be careful who you borrow from

The good thing about a bank loan is that one can talk to the bank. Borrowing from a non-bank lender, one of my clients had been faced by a debt collector who said to the person not making loan repayments, “How would you like to end up in the dam with a lump of concrete around your feet?” Even when a bank debt is seriously behind we have found that the bank will deal with it sensibly. Physical violence is not part of their recovery process, even though financial abuse is. However, business owners need to treat any threat by the bank seriously. Because a bank can foreclose on the business, appoint a receiver or take insolvency action against them. Call a consultant fast if that happens, because that can cost a business owner a fortune and lose the operation in a flash.

Use an accountant who has been paid for producing the figures.

Figures that cost a business owner heaps for the accountant to prepare, turn into a technicolour landscape in the hands of a skilled financial analyst. Studying accounting enabled me to run the Australia-wide GBAC consultancy, run and equipment hire business, an art rentals business, own and run sheep and cattle farms. At the same time, developing the most effective political persuasion tool in Australia, the Votergrams. I thank all those business owners and accountants who at conventions and conferences or just as neighbours, shared their knowledge with me. That knowledge, I can now pass it on to others.

What I have learned is that there is almost always a good solution to any problem. The dull old financial statements that have been paid for to do tax returns can often help provide those good solutions.

Greg Bloomfield