Refinancing for small business flexiblity

Steve recently has a client referred to him who runs a painting business. The client had a home loan, a large tax position, and required a business overdraft to improve their operating rhythm. Despite being in a growth phase, the business was struggling to make headway as they were on an accelerated payment plan with the ATO, paying $2k per week. This left them with limited cash, and they had to rely on invoice financing to keep things going. While they were meeting all their commitments, they felt the need for a new strategy that would simplify things, save them money, and enable them to plan for the future.

Improving cash flow

The clients’ primary goal was to improve their cash flow since they had a significant payment plan to the Australian Taxation Office (ATO). The aim was to free up funds in their business, allowing them to utilise them for further growth. They were aware that refinancing the tax debt would extend its term, but they considered it a reasonable trade-off for the flexibility to access cash in their business. They were also keen to secure a better interest rate on their home loan. Additionally, they wished to have an unsecured business overdraft to provide them with liquidity and added flexibility.

The Venro solution

Venro, we were able to identify an opportunity to refinance the current home loan and improve the interest rate. As a result, we were able to:

  • Refinance and reduce home loan interest rate
  • Free up sufficient funding to clear the outstanding ATO debt
  • Secure an overdraft for $50k to add flexibility to the business

We worked with several lenders to workshop this and sought approval without having to pivot and go to another lender, which could have impacted the clients credit file.

Outcomes and benefits

We received different responses from lenders who agreed to consider the tax situation as long as the existing payment plan was being followed on time. We then compared those responses with the rates and terms of the current lenders. Based on this, we submitted the application for approval, knowing that we had the bank’s appeitite. At the same time, we were also able to complete the unsecured overdraft. As a result, we received a lower annual fee, no changes to the offset options, a lower interest rate, and more liquidity to invest back into the business without any restrictions.