Case study: $250,000 Unsecured Overdraft to a Mechanical Services Business

Around six months ago, a mechanical services business reached out to us as they had recently identified their bookkeeper had not been lodging BAS for a significant period of time, and they had substantial ATO debt.

The business owners were excellent mechanics, however, had trusted their business administration to others and had not checked up to make sure everything was in order.

Looking at their circumstances, we identified they hadn’t made any payments to the ATO in over six months.

While some finance could have been obtained at that time, because of the lack of payments to the ATO, the only lenders who would provide an approval would be expensive and at terms that would make cash flow more challenging going forward (as opposed to improving their circumstances).

We explained this to the directors and put it to them that instead of seeking finance now, if they could stick to the terms of their payment plan and maintain good account conduct across their business bank statements for another six months, we would be in a position to seek an approval from a lender who would offer them an unsecured overdraft limit at a higher level, with much lower rates, and who also has an excellent customer satisfaction history.

The directors were on board with the strategy and followed the advice to the letter.

This meant when the application was eventually placed six months later, instead of having an approval at best for an unsecured term loan of $100,000 with expensive rates and a short repayment period, an unsecured overdraft of $250,000 was secured with no establishment fees, no line fees, no management fees, and no monthly fees.

The difference in outcome is significant and provides the business with a genuine working capital solution to help them purchase parts on larger jobs and continue to expand with confidence, all while their ATO position continues to improve.

If you’re looking for the right working capital solution for your business, reach out, and we’ll be happy to talk you through your options.

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