It is one thing to take out a personal mortgage loan to buy a home when the borrower has a secure job with a salary that will provide plenty of funds to cover repayments. However, business owners know that their profits can vary from year to year depending on a variety of factors, not all are under their control. Cashflow can also vary even more frequently in an unstable economy. It is important that they obtain a loan with the very best interest rates and the most flexible terms to accommodate those variations without the bank disrupting cashflow by unreasonable demands. Banks always give themselves great power in the fine print of their loan contracts.
The Borrow Better facility puts borrowers in charge. That is a big change from working with a bank or a bank-paid broker, where the bank begins and remains in charge of the loan facility. When four or five banks have competed to lend to a business and the business owner after some discussions and analysis of the loan offers, has chosen one, that bank looks after them and the other banks stand ready to pick up the business should that banking relationship sour in the next year or so. It also means that instead of a very substantial brokerage fee being partly paid as an establishment fee and partly capitalised into the loan repayments, the chosen bank will probably reduce or eliminate the loan establishment fee.
Businesses that have used the Borrow Better facility, have run with the same lender and excellent relationships through good times and bad for decades. That may be because most have engaged The Borrow Better founders GBAC business loan consultants to ensure that the loan is serviceable by the business and that the business is run on sound profitability principles so that it can always cope with the loan.
Aussies have some unique ways of reacting to problems. The swagman jumped into the billabong,
but today’s Aussie borrowers might want to square up to the multi-billionaire banks with their multi million dollar executives and demand a bit of respect. GBAC helps borrowers do that from a position of strength rather than one of being the underdog, kicked around to enrich the bank.
Borrowers in default on loans can shore up their defences with some very effective strategies.
13,000 Australian borrowers are currently said to be at risk of loan default. APRA says it is modelling how safe the banking industry is from recession. Nobody bothers to model how safe those farm and business borrowers or home-buyers are from foreclosure.
That is why we established our GBAC debt consultancy years ago for small business owners and farmers. I have owned family farms and businesses. When default looms, borrowers can act fast to make themselves safe from foreclosure. Business debt mediation and farm debt mediation are options that should be strategically prepared for very well, as the bank will use ruthless experienced officers and lawyers. They are more of a last resort.
Votergrams can also provide a very effective remedy for home loan borrowers who have been cheated, misled or robbed by the bank. Votergrams enable borrowers to inform the parliament of what the bank has done wrong and to seek help. Given the massive dishonesty of major banks revealed by the Banking Royal Commission, MPs are very willing to assist.
Refinance is always an option. It can be a very good way of dealing with bank loan or debt problems. We offer a cheap and effective Borrow Better service that helps borrowers get the cheapest and best loan available. It is no good hoping that a broker paid by the bank is going to negotiate the cost and terms of your loan down for you. They are paid to make money for the bank.
I am not a fan of restructures like debt consolidation because that puts “all you eggs into one basket”. If the consolidated debt gets into trouble it can cause a storm rather than a shower. Better to have your debts spread a bit so that you can negotiate with each lender and if one gives you a hard time then it only affects a small part of your total debt. Debt help is always available from www.gbac.au and in my experiences the faster it is sought the sooner the problem is solved.
The Aussie debt solution is to take on the bank and fight like made for a fair go. Billionaire banks can easily afford to make concessions that help their borrower customers. Without the borrowers the banks would go broke!
Banks knew interest rates would rise. Borrowers did not.
Thousands stand to lose their homes, deposits, repayments, businesses or farms. Banks will patiently wait until they trip up then pounce. Banks collect interest in all those years as they wait.
There are many bank debt solutions for borrowers . If you or someone you know is threatened with foreclosure, or under pressure by the bank, contact us at FairGO or GBAC for a FREE chat.
Why would Federal Parliament, ASIC provide protection for dishonest banks?
We will not be stopped from helping home buyers by the federal Debt Management Services regulation designed to protect dishonest banks from our forensic investigation into their home loan practices. Maybe it was introduced in 2021 during Covid as a temporary measure but the Federal MPs need to get rid of it now. They did enough damage to customers by deregulating banks in the late 1980’s. Ever since then federal and state taxpayers have been paying to help out borrowers entrapped, lied to , cheated and misled by their deregulated banks.
Banks are earning billions and can afford to stand by customers when things get tough. They just don’t care!
GBAC will not stand by while bank customers suffer.
We will help borrowers out within that cruel law, as we have done for borrowers all over Australia since federal politicians first de-regulated banks in the late 1980’s, allowing them to rip of customers as the Royal Commission discovered.
That is why GBAC bank debt solutions has just launched “Bankwatch” to run the same sort of Votergram campaign as Roadwatch did when it reduced the road toll by 70%. In those days the road transport industry behaved like the banking industry does now. But the truck drivers joined Roadwatch and reported on their corporate bosses. Now bank customers and staff will be able to discretely report their director and CEOs to every member of federal Parliament
Banks think that their big political donations protect them, but through our GBAC and Votergram services, we have provided Australian voters with more power and influence than voters have in any other democracy in the world. As Normie says “You don’t have to suffer in silence”.
There are two solutions to clearing a loan. One is to make a profit. The other is to borrow more debt to pay out the original loan. The second is not a real solution because debt remains, but it is the more dangerous because when people borrow a new loan ton pay out an old one they usually borrow more not less. When we negotiate with banks to get a substantial debt write off for the business or farm owners we are then able to refinance with another lender for a lower amount of debt. It is not usual but we have had a bank write off 50% of a loan and then retain the borrower as a customer. That is what I call a good bank. But back to making profit a priority.
Profits can be thin on the ground in many family farms and businesses, particularly when times are tough. At any one time they depend on a number of factors.
Mind power
The first aspect of profit is mental determination to make a profit. If you do not make a profit what is the point of running a family farm or business? Not only that. The alternative is making losses and they may well lose the farm or business in the long-run.
That involves spending less than is received in income. Never think of it as earning more than you spend because you can control what you spend but you cannot control what you receive in revenue.
Loan management
When money is borrowed, there is often insufficient attention paid to the cost of interest and charges. Bankers are brilliant at glossing over the cost of the loans they constantly promote as the solutions to all our problems. I am very conservative so I prefer a fixed interest loan, but that costs more initially than a variable interest rate loan. Trouble with a variable rate loan is that the rate can rise. I have had to sort out problems with loans on which the interest rate went to 24% and higher even.
Sometimes people think that they will make more money by borrowing but it has rarely been my experience except where the loan is to buy a productive asset. Running a business on overdraft or borrowing money from a stock agent to trade cattle can be a very attractive path to bankruptcy or at least a serious battle with the bank. The bank will treat the borrower taking out a loan like a prince, but if that borrower becomes a defaulter they can be mercilessly pursued like a pauper for recovery of the debt.
Paying the family
Far too often a family will run a business or farm and not draw out any money as their profit or “wages”. The owners need to draw a reasonable salary, but that should never create a loss. If the children are working, they need to be paid properly too but the same applies to losses. Profits are the source of money to live on, expansion, improvements and loan repayments. Losses are dangerous, a road to ruin, as the enterprise may be lost to foreclosure.
Touchy situations
If the family is not properly paid for the work done, it can cause serious disagreement when retirement or sale is contemplated. That is the “crunch” time for many families. Sometimes the disputes end up in court absorbing much of an inheritance in legal fees, along with family friendships. GBAC promotes Profit as a Priority, for sustainability, security and family.
Succession Planning Pays
Preparing for succession to the business or farm pays off and not only in terms of the assets and income stream, but also in terms of family relationships. At GBAC we have seen brothers and sisters who will not speak to each other because of some perceived or real slight delivered by their parents in the division of family property. Call us if ever you feel that this has been neglected in your case and let us fix it. It is dynamite. The earlier a Succession Plan is developed the better. It can be modified as circumstances change over the years.
Succession also involves different values placed on assets, income and heritage. I had no problems selling the family cattle property that I had slaved 6 days a week on and off farm for 20 years, to pay off. Others feel terrible to have broken with tradition. Whatever your views it is wise to plan accordingly in a way that the plan will not be undone when you die. If there is one thing I have learned about Succession Planning, it is that you cannot determine what will happen after you die. My grandfather decided that he would exclude my mother and me from control of the family company he and my late father had run together. He left his controlling shares to outsiders. I had different ideas after his death and so applied my time, money and effort for many years to take total control for my mother, sisters and self. Boy did I learn fast! Lucky I had topped Australia in my corporate law subject.
Improvements
Fencing and machinery can be key farm profit-destroyers, as can fit-out and IT in a small business. I had three tractors on my 3,300 beef cattle property at the time I went to one of the “Grazing for Profit” courses Terry McCosker ran. He commented that on a purely grazing property “If you are crazy about machinery it is ok to have a wheelbarrow”. I sold the tractors when I returned from the course, which eliminated fuel and repairs. Then I stopped buying bulk fuel and bought it as needed from the pub or servo. Expenses plummeted and profits rose. I bought fencing when I needed it as opposed to buying in June to get tax deduction, used branches to prop up fallen fences and ran solar wires or tape in some places instead of new ring-lock, barb and plain. I did not lose any more stock than I had before.
When laying 2” poly pipe to pump water from a valley with a flowing creek to one where the creek ran dry I was given a very expensive option for burying about a kilometre of pipe, on the basis that the sun and weather would damage it otherwise. My wife and I opted to run it above ground ourselves and it lasted without trouble, protected by the feed that covered it in all but the driest times.
We all have different skills Plenty of my neighbours knew much more about raising cattle than I ever would and were kind enough to share their knowledge with me. On the other hand my Chartered Accountancy background that had involved financial consulting to farms from just outside Canberra to the Kimberleys in WA, stood me in good stead when it came to making sure that the farm pumped profits out instead of absorbing cash like a sponge, as almost any farm or business will. The more we learn from others with different skills the better our annual profits will look. Just be happy to earn profits and pay taxes to help with roads, schools, hospitals and aged care. I had a senior partner in my young accounting days who promoted profits saying, “No matter how much tax there is on each extra dollar, there will be some left for you.” Make Profits your Priority and then get a good accountant who ensures you pay only what is required by the Tax Act.
