Highlight and case study of the Week

Construction loan for an Adelaide noddle box restaurant

Adelaide based customer was referred to me via a referrer.  Customer operates a noddle box restaurant at a large shopping centre based in Adelaide. When he approached me, he was in a desperate situation having engaged two other brokers who have placed him with two other financiers to assist him with a construction loan facility so that he could finish off his first commercial property investment which he had been planning for five years. The two financiers could not assist- mainly due to limited appetite for construction funding in the banking segment which is classified as small business, and both could not utilize the income from a pre-lease agreement that customer had already negotiated with the tenant. Without relying on the pre-lease and purely utilizing the income from this trading entity, the earnings were insufficient to service the construction facility for $ 1.4m.

At the time of engaging myself in October, customer was in the middle of assessment with another financier having engaged a third broker. Customer was extremely impatient on the phone, and he was in a despair situation having started the loan application in May which was 5 months ago. Eventually he disengaged the other broker to deal with the bank and appointed me to be his broker as the previous broker did not understand the metrics and many of the terminology that was used by the banker. 

Having to explain to him that this bank wasn't the best suited for his circumstances as they also could not extend the construction amount that the customer requires, we quickly moved banks once again to the one which would most tailor to his circumstances.

From submission to funding, it took approx. 5 weeks and customer could not be grateful enough that he was eventually approved for the construction facility that he requires. 

12 months later, the occupancy permit has finally been obtained and all the progress draw payments had been extremely quick to be processed to the builder as no quantity surveyor was required. 

Last week the bank converted the construction facility to an investment facility and the customer could finally breathe having started this journey 5 years ago.

Customer is now a big advocate for my business having referred me his sister for her home loan and his friend who owns a kid's playground business which required funding for playground equipment. 

Keith Ho  MAF, B.BFin

Director

Ho Finance- Finance Made Simple

Australia & New Zealand

LVL G/575 Bourke Street

Melbourne Victoria 3000

Australia

E:  [email protected]

M: 0457 451 107