My client owns the freehold and operates a hotel in Western Queensland. They were being pressured by their lender to make debt reductions, and had been given a three month ultimatum.
My client has maintained a consistent profit level over the last two years, and has been conducting all accounts with his bank well. As well as this hotel, my client became involved in a few other business deals, leaving them with a sizeable ATO debt.
Examining their situation, I noted that the current lender was charging 11.5% for facilities that should have been around 9.5% or better. This alone amounts to a considerable interest difference, and in this instance was approximately $40,000 per year in association with other fees.
Also, the hotel was purchased in a rising market and as such the business debts are at the higher end of bank ratios, given the softening of values that has occurred over the last couple years.
I found a lender that enabled the client to restructure their position, and pay out the ATO debt – thereby overcoming potential issues for future finance, by removing the ATO from the balance sheet.
The new lender will allow my client to amortise the portion of the loan that takes it outside the current standard ratios – meaning the client can continue their core business knowing that their new lender is working with them.
If your existing lender is pressuring you to repay debt or you would like an opinion on what you are currently being charged for your loans then contact us on 07 5413 9300.