In another article about the collateral loan services BizLoansFast offer, we looked at Short Term Business loans. Often you might hear this type of loan referred to as a Caveat Loan or a Business Bridging Loan. But there’s another type of BizLoansFast collateral loan, the Fast Second Mortgage Loan, and this is what we’ll now investigate.
Now, as with all our BizLoansFast loans, our Fast Second Mortgage Loan has to be for a business purpose or commercial investment. The key ingredients of this type of loan is that it sits in behind an existing first mortgage you already have with your bank, and you can borrow from $20,000 to $5,000,000 in funding. As the name of the loan suggests it is ideal for borrowers that want the funds in their bank account quickly– we’re talking tomorrow here—no time like the present right!
One of the great things about this type of loan is that it is over a minimum of 12 months, and over that time each month you are paying back the interest only. This is a lot more economical than an old school principal plus interest loan, and means that the largest proportion possible of the funds you’ve borrowed get utilised in your business. After all that’s what you took the loan out for in the first place right? That why this type of loan makes good business sense.
This loan structure also has flexibility because at the end of the first 12-month period you can elect to keep the loan term going and just continue to pay the monthly interest installments, with no additional fees or penalties, then later just pay the loan out when your cashflow and business situation warrants it. And guess what, here’s some more good news—because this is a business loan, all interest and costs associated costs in taking the loan out are fully tax deductible.
So to summarise:
- If you need access to $20,000 to $5,000,000
- If you need the funds within 24 Hours of applying
- Want a minimum loan term of at least 12 months
- Want to be able to extend the life of the loan without incurring penalties
- Have a loan that is completely tax deductible
- Pay only the interest each month
- Not have to pay for business valuations or start digging around for reams of financial records
- Need a loan that’s perfect for a new start-up business or seasonal business
- And are concerned because you might show a poor credit rating or have overdue tax
Our BizLoansFast Fast Second Mortgage could be for you.
Here’s an example of how a Fast Second Mortgage Loan worked well for a client called Jake who came to us a few years back with a seasonal business.
Jake was in his mid-twenties and had just inherited a mango orchard in Queensland from his grandfather. The Orchard had been in the family for years and Jake had fond memories of working there during school holidays to help out his grandfather.
The house his grandfather had lived in was also on the property and included in the inheritance. At this point in his life Jake was actually a successful financial advisor with a good business going and settled in a family home with his wife and new-born baby.
Initially he thought he’d just sell the orchard and house, but then realised, although the machinery and shed were a bit dilapidated, with a substantial cash injection he might turn it into a larger more successful business and keep his grandfathers name on the mango boxes. Growing season was just around the corner. He knew he’d had to act quickly to get the new equipment he needed, build a new bigger, more modern processing shed, employ a manager, plus backpackers to pick and process, and take advantage.
That’s when he turned to us. Within 24 hours we’d secured the loan against the value of the house on it and in the next couple of weeks Jake bought everything he needed, employed an orchard manager to oversee the new operation and refurbished the house as staff accommodation for his brigade of pickers. That first season Jake quadrupled the output of the orchard.
At the end of the loans 12-month term, he could easily pay the loan off in full with the profits he’d made, but instead decided to keep it going and just pay the interest. He put the profits he was making from the first orchard into buying an orchard that was up for sale next door, and combined them into one larger operation- that was smart.
The next year he paid the original loan out in full, and with the last payment a full box of mangoes arrived at our office for the consultant who had approved the original loan—with Jake’s family name still on the box.
If you think like Jake, a Fast Second Mortgage Loan might be appropriate for you, give us a call on 1300 852 150