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Businesses battle for funding as allowance deadline looms
| Guest post by: Ken Richards |
Article Overview: Many small businesses are battling to secure bank funding with only weeks remaining before the Federal Government’s December 31 investment allowance deadline that allows them to claim an additional 50 per cent tax deduction on eligible depreciating assets.
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Free Download - ATO tax break could cost companies dearly By Ken Richards |
Businesses battle for funding as allowance deadline looms
Many small businesses are battling to secure bank funding with only weeks remaining before the Federal Government’s December 31 investment allowance deadline that allows them to claim an additional 50 per cent tax deduction on eligible depreciating assets.
As well as introducing tougher lending policies, the major banks are also imposing funding application deadlines on businesses of early December for guaranteed approval prior to December 31.
“Our clients are definitely telling us that access to funds is drying up from their primary bank,” said Matthew Atkin, equipment finance specialist at national finance broking group Interlease.
“We have had a strong enquiry from clients who are confused about credit decisions and not sure how to get the funds they require for capital purchases. The Government’s increased investment allowance is very attractive, but many businesses won’t be able to take advantage of it because of funding issues.
“It’s a double blow really, because the purchase of equipment from overseas is very attractive at the moment with the Australian dollar so high and rates still relatively low. The investment carrot has been dangled in front of small businesses but they can’t get their teeth into it.”
Mr Atkin said businesses need to be getting their funding application processes started now to avoid missing the end of year investment allowance deadline.
“When attempting to access funds businesses also must be aware of the changing credit landscape,” he said. “They cannot rely on the fact their bank has always approved applications previously due to the fact funders are changing credit rules or are applying the existing ones more strictly.”
“Some asset classes are not permitted unless there is dollar-for-dollar security via property or cash deposits. Businesses are being asked to provide additional security, even for stronger asset classes.
“This is all happening whilst the funders are appearing to take a greater margin on all commercial products including equipment finance. The rate cuts have never really flowed through into the equipment finance space. Businesses are therefore paying more for loans that are secured by more assets, so they are often far worse off even if they can get access to the funds.”
Mr Atkin said businesses must have access to a number of funders to ensure they are able to get an approval in place before December 31, and they need to know “who is going to buy their deal given their company performance, the asset in question etc.”
“They need to know which of the funders are willing to do the deal at a fair price and with as little security as possible. This is a full-time job, so they really need to have access to a specialist in equipment finance who can do this on their behalf.”
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About the Author: Ken Richards RSS for Ken's articles - Visit Ken's website Click here to visit Ken's website   SMEs grapple with restricted funding access Businesses battle for funding as allowance deadline looms ATO tax break could cost companies dearly ATO tax break hides a financial sting Business credit remains tough in difficult times |
Related Forum Posts
Suggestion for an Entrepreneur Looking for Funding
- I am new to this forum but have been actively assisting my husband with his cash flow business for a number of months. One issue that I have seen that often occurs from those looking for funding is the lack of paper work that is needed when a funding request is presented. It is so vitally important for an Entrepreneur to have their paper work up to date (business plans, executive summary) before they look for funding. In addition, it is so vitally important to keep in touch with the funding source to expediate their funding project.
Re: Lemonade Stand Lessons
- [quote="jvprosperity":3el7obf0]How about parents exposing their children to business early on? Business can be a boring subject to children but how does a parent make it fun.
There is so much to be learned in life from business lessons but it can be dry to a child.
Does a parent expose it thru a lemonade stand experience? how does the parent explain in a fun way that the reason no sales are being made is due to location or advertising??[/quote:3el7obf0]
It's been a while since I've seen a lemonade stand...and I don't think I've seen seen cubscouts or boyscouts doing any fund raising, but of course every year girl scouts selling cookies door to door... That's more proactive than sitting on a street corner waiting for people to drop by...
Does it teach them about business though...I don't think so.
Having kids do chores for allowance money would be the way to go - you don't do your chores you don't get your allowance... you don't have enough money to buy something you have to wait for next week's allowance --- too often parent will buy the kid the object anyway, giving him or her a sense of "instant gratification" which will destroy any concept of developing patience or realizing that you have to work for what you want...
Getting Funding
- I may have mentioned this previously, but one item that I have seen not to be included when asking for any type of funding is listing assets. Often times, an individual will ask for a type of funding and will neglect to list any assets/collateral that they have to complete the funding process.
Re: Suggestion for an Entrepreneur Looking for Funding
- [quote="speechlady"]I am new to this forum but have been actively assisting my husband with his cash flow business for a number of months. One issue that I have seen that often occurs from those looking for funding is the lack of paper work that is needed when a funding request is presented. It is so vitally important for an Entrepreneur to have their paper work up to date (business plans, executive summary) before they look for funding. In addition, it is so vitally important to keep in touch with the funding source to expediate their funding project.[/quote]
I agree with speechlady - and would like to add the following:
It's important for you and your company to be "capital ready".
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