Financing options in Australia
August 27, 2024
by a searcher from Technical University of Denmark in Melbourne VIC, Australia
Hi',
Looking to understand financing options/vehicles in Australia.
I would also appreciate specific advice for acquisitions with deal size of $2M. Although high margin, no assets. Delivering consultancy based services.
Most lenders would be interested in lending against assets, which are not available in this case.... so how to best structure it?
from University of Queensland in Melbourne VIC, Australia
^redacted always happy to have a chat with anyone in the ETA community and give our thoughts freely. Deal structure and support is rarely determined by a single item issue, eg, we have had a main bank operating leverage covenant support at 2.75x recently for a business with no balance sheet assets but very strong recurring contractual revenue. The point is that the overall risk profile is important to understand and articulate to any lender.
from University of Adelaide in Sydney NSW, Australia
I have found that the Big4 banks are more competitive on rates but generally require more equity and are more restrictive on terms.
As with anything in Australia, if you can make the loan property-backed, the whole dynamic changes - but if the property is commercial (i.e. for the business), the multiple you have to pay on the property component can make the whole purchase non-viable despite the better terms on the loan.