HOME
FAQ
Why business finance?

Why business finance?

Answers on why businesses use finance to grow.
How does refinancing a business loan work?

Refinancing is essentially paying off existing debt with a new loan. There are a few reasons you might want to refinance an existing loan, including:

  • You want to pay less on your loan repayments
  • Your original business loan is no longer appropriate for your current business situation
  • You want to renovate the commercial property or equipment for which you took a loan
  • The fixed rate term on your original loan has ended
  • You’d like to consolidate several loans you made into a single loan

There are additional costs that come with refinancing, such as: loan application fees, borrowing costs, break costs, exit/discharge fees, valuation fees and settlement fees. These can be expensive so you will have to carefully consider if the cost of refinancing is worthwhile for you. Our lending experts can help you determine whether it’s the right move.

Are business loans tax deductible?

In Australia, business loans themselves are not tax deductible, however, the interest you pay on them is. This applies to virtually all types of business financing. Be sure to keep a record of any business-related payments you’ve made, as the ATO needs proof of interest payments in order to accept your claim at time tax.

Are there any downsides to taking out business finance?

There are a few things that need to be carefully considered before you sign on the dotted line:

  • Taking out finance is a liability – Even if a company closes down or goes into bankruptcy, debts need to be repaid or settled. Consider whether you’re in a comfortable position to afford the loan itself, as well as interest payments and fees.
  • There is a risk of losing your collateral – Because loans need to be repaid, there is a cost for non-payment. If you put up a piece of property or equipment as collateral and fail to make payments on your loan, you can lose that asset. Your debtors will have a legal right over it.
  • There could be implications for your credit score – Taking out a loan could lower your credit score in the short-term because you’ve acquired a liability. But if you pay on time, this will certainly improve your rating. Should you decide to borrow more money from the same lender, however, they will see you as a higher risk since you now owe them more money. And they will usually charge higher interest rates on each subsequent loan.

‍

How will business finance benefit me?

Taking out finance can help you bridge gaps in cash flow, expand, or improve the day-to-day running of your business.

Some business owners even take out finance as a buffer to avoid eroding cash flow or gain a little extra breathing space, and find that they sleep easier at night knowing they’re in control (even if something unexpected were to happen).

Whether you’re looking to grow, solve a problem, buy an asset or simply alleviate some of the stress that comes with running a business, we have a solution for you.