Our client runs a commercial plumbing business with over 40 staff and was waiting on payment for over $1M of invoicing.
With a significant percentage of their work coming from the commercial construction sector, they, like many other business owners, were impacted by large contractors paying late.
These late payments from contractors had created a temporary cash flow squeeze that had the potential to impact the following week’s payroll if contractors continued to delay payment.
For this reason, they were looking to raise capital fast and asked their overdraft provider for an extension to their line of credit. Their overdraft provider in turn reached out to us to obtain property security for the client and begin an assessment that would have taken more time than the client had.
Understanding the client’s business is strong, despite the temporary cash flow squeeze, and they were only seeking a solution for a week or two until invoices were paid, we recommended an unsecured term loan that provided a genuine discount on interest for early repayment.
On early repayment this lender’s policy is charge the next fortnight’s interest and then forgive the rest no matter how long is left on the term.
This genuine discount on interest is differs to other unsecured lenders as, while some of them might provide a discount shortly after settlement on a sliding scale, many will charge all of the interest on a loan irrespective if there is a year or two to go when it’s paid out.
Importantly, we also knew our chosen lender had capacity to assess and settle the loan within 48 hours.
Our client agreed with the recommendation and they were very happy their application was approved in just a few business hours and settled with funds in their account the day after.
Payroll sorted!
Why This Loan Solution Was Right For This Plumbing Business
The client initially reached out to their overdraft provider for a limit extension but this wasn’t the best solution for their needs. While their unsecured overdraft provider had been a great option a few years ago to set up a line of credit, their existing lender had changed their appetite for borrowers connected to commercial construction. What previously had been a fast no doc application process now requires full documents that include year to date financials as well as the previous 2 year’s financials, tax portal information and property security. A loan with these application requirements was not going to work given the funding time requirements.
A Fast Loan Solution
With payroll in less than a week away, the plumbing business owner needed a very fast business loan solution. This was not going to happen with their overdraft provider asking for a full doc line of credit application with property security.
One of the least talked about but most important factors in selecting the right lender for your loan is making sure the lender you’ve chosen has the capacity to settle the loan you need in the timeframe you need it. The unsecured lender we recommended for our client’s needs had been consistently assessing loan applications within 24 hours and making an approval decision the same day. This gave us confidence they could fund our client in the timeframe required, which we were very pleased to see certainly proved to be the case.
Discounted Interest For Early Payout
Many unsecured loans are a fixed loan term product. This means that many of them will not provide a discount despite their loan being paid out ahead of schedule. The client was waiting on a high value of invoices to be paid, that once received would be more than enough to clear their loan balance. The lender we recommended provides a discount for early repayment. When the loan is cleared, they will charge the next fortnight’s interest only and then forgive the rest even if there is up to 5 years remaining on the loan. The discounted interest is a great policy feature that would work for any business owner seeking to pay out their loan ahead of schedule and it certainly worked for our client who was very pleased they would be saving thousands off their loan costs.
Conclusion: Fast, Flexible Financing Solutions for Australian Businesses
By understanding the unique needs of our client’s plumbing business and leveraging our extensive knowledge of lender policy and turnaround times, we were able to:
- Quickly identify an appropriate unsecured loan solution when traditional options weren’t suitable
- Secure approval and funding within 48 hours, ensuring payroll obligations were met
- Recommend a lender offering genuine interest discounts for early repayment, saving our client thousands of dollars
Whether you’re dealing with late-paying contractors, unexpected expenses, or growth opportunities, our team is equipped to find the right financing solution for your business.
Don’t let temporary cash flow issues hold your business back – contact Dark Horse Financial.
