Hello and welcome to Banjo Loans Deal of the month My name is Jason Gatt, and I’m the Partner Manager for VIC, WA and Tassie.
I’m excited to share this working capital loan deal with you. It’s for a major supplier and installer of motors for wind farming construction.
Based in Australia, the business is owned by a Denmark company who was then owned by other international firms. They have also been providing ongoing maintenance services for the entire windfarm cycle for almost two decades.
The business has a massive world-wide presence, currently servicing over 17 different countries. Established in 2004, this innovative company Established in 2004, this innovative company and currently has an annual turnover of $25 million.
Approaching Banjo Loans, this business required funding to develop new technology that would replace the usage of expensive cranes for their crane maintenance services arm. Instead of using expensive cranes to lift a Instead of using expensive cranes to lift a would enable them to push the motor into the air from underneath, reducing their largest expense and save between $2 to $3 million dollars a year.
This scenario along with the Australian entity being owned by several overseas firms led to a high level of complexity. The businesses finance broker needed a lender who could, firstly, provide the full loan amount and secondly could understand and be willing to work with the complex ownership structure.
Banjo’s approvals team has the expertise to drill into the ownership structure, and the broker took comfort that we could provide the full $1,000,000 dollar loan amount requested.
A 24-month working capital loan was funded quickly and they now can invest that money to result in the long-term efficiencies in its operations by saving $2-$3 million annually.
Thanks for watching, and if you have customers, you feel could benefit from a Banjo working capital loan, please do not hesitate to call me. Also, please keep an eye out for our soon to be released Asset Finance product.
For more please follow us on LinkedIn at Banjo Loans and subscribe to our YouTube channel.
Hi, and welcome to Banjo Loans Deal of the month
My name is Nick Rogers, and I’m a Partner Manager for VIC and SA
This business is a privately-owned Australian retirement village development and management business. An established business in operation for almost 15 years and has an annual turnover of $16 million, it currently comprises of 404 completed and occupied independent living units.
Their growth goals aim to develop up to 1,110 units. In their plan, their vision is to provide residents with commercial and retail spaces, a 9-hole golf course, and related recreational facilities.
Historically, the retirement village achieved new settlements of 45-55 per year, however the flow on effects of COVID saw the settlements reduced to as little as 17 in FY22. This resulted in the cost to complete funding ratios to be exceeded, as well as delays in earth works and building.
The business approached Banjo for our short-term funding solution in order to pay out builders for outstanding claims, for assistance with the earthworks/construction supplier and to cover GST payments for the following 2 months.
Banjo’s credit assessors reviewed the credit factors and discovered that the directors had a strong commercial background in finance and were considered high integrity.
This business was also a leading retirement village in Australia and was highly profitable.
Due to these factors, Banjo assisted with a 2 to 6 month Single Pay (bridging finance) Loan of $1,000,000 within 4 days of application approval so the business could progress with its vision.
Thanks for watching, and if you have customers, you feel could benefit from a Banjo Working Capital Loan, please do not hesitate to your local Business Development Manager from Banjo. Likewise, please keep an eye out for our soon-to-be-released Asset Finance product.
For more please follow us on LinkedIn at Banjo Loans and subscribe to our YouTube channel.
Business Wrap - August 2022
Although we’ve had four RBA interest rate hikes this year that have taken the official cash rate to 1.85%, many consumers are yet to feel the full impact.
The last three rate rises (June, July and August) are only just starting to flow through to borrowers, as banks and other lenders pass on each successive rate with a sufficient notice period.
So while Aussies are quite subdued by the knowledge that cheap money has ended, many may not feel the cumulative effect on their wallets until around November.
Commonwealth Bank CEO Matt Comyn is also quoted as saying said the record low level of bad debts is a lagging indicator. Both are compelling reasons to avoid complacency and look to revisit your business forecasts.
Current predictions are that the RBA will continue to lift the cash rate to between 2.5 and 3% until inflation (currently at 6.1%) peaks at 7 to 8% later this year, then falls back to the top of the 2 to 3 per cent target range by some time in 2024.
This has been the fastest annual growth in inflation since 2001, forcing consumers to shell out more for everything from fuel to food. Fruit and vegetable prices rose almost 6% in the June quarter alone, prompted in part by shortages caused by heavy rains in areas of the east coast of Australia.
We haven’t seen inflation grow this fast since the introduction of the GST, so many small business owners haven’t experienced running their business in such an environment.
And while supply chains are beginning to normalise, rolling lockdowns in China can still have an impact. Some suppliers are favouring larger markets like the US, causing headaches for Aussie businesses that need to pivot to different sources. On the domestic front, services like Australia Post have announced price hikes, effective from early September.
These and other challenges can eat into profits and impact your business's viability. Let’s look at some tactics for mitigating them. This assumes you already know what your margins and operating costs are.
Strong cash flow is essential to help you manage the inflationary headwinds and continue investing in your business regardless of the tactics used. According to Xero, about one in five small businesses experience a cash flow crunch – where expenses exceed revenue – at least 50 per cent of the year. Business loans can help cut through that crunch with the cash you need to move forward, whether it’s managing your supply chain, investing in new assets or simply covering unexpected expenses.
With business loan interest rates rising, and residential property prices set to dip, you’d want to think long and hard before taking out a loan secured to your home or business property. Instead, explore the non-bank lending products out there, like Banjo's Working Capital Loan which is much more adaptable to the needs of smaller, high-growth businesses across a range of industries.
Hi, and welcome to Banjo Loans Deal of the month
My name is Sally, and I am the Business Loan Specialist at Banjo.
This online women’s swimwear business’ mission is to promote a positive body image for women in every stage of their life. They’ve recently expanded their product range into men and children’s swimwear and activewear.
The online retailer was established in 2017 with an approximate annual turnover of 10 million dollars.
Like most SMEs during COVID-19, the brand was negatively impacted in the Australian market, and as a result, they found it was a good time to establish a market in the US. The US market has been growing steadily, and funds were required for general working capital to enable expansion.
The client had initially approached another firm for trade finance, however, they were unhappy with the terms and decided to approach Banjo Loans instead.
They were seeking an easy and fast cash flow solution, as the client was currently using their savings and tax to pay for the stock at the time.
A 24-month straight-line amortising loan of $500,000 was then provided to the client within 1 week of beginning the application process, the approval time was just 48 hours from the application submission.
As a result of Banjo’s funding, they have peace of mind that they’re not tapping into their personal savings, and the business has the cash flow and liquidity it needs for the next stage of evolution
Thanks for watching, and if you would like to keep up to date with the latest from Banjo, follow us on LinkedIn at Banjo Loans.
SMEs are recovering well from a difficult year, and signs are pointing to a positive economic environment for FY22. In the next 12 months, nearly two-thirds of SMEs are planning to borrow to drive growth for their businesses. But there are still too many pain points around getting the appropriate funding.
These are some of the many findings in the Banjo SME Compass report 2021. The report reflects a recovering SME sector, many of whom are feeling positive about the year ahead and planning for growth. Yet barriers to growth remain, and a surprising number are lagging in getting their businesses online.
Banjo’s SME Compass report is based on research commissioned by Banjo, to analyse how the engine room of the Australian economy is going. A broad cross-section of SMEs across Australia was surveyed earlier this year by Honeycomb Strategy for Banjo.
Not surprisingly, just a quarter of SMEs say they exceeded their revenue targets last year. There was a common factor among the 25% who recorded strong performance: all of them invested for growth by implementing new technology, improving products and buying new assets or equipment in 2020. Those who leveraged debtor or supply chain finance were significantly more likely to exceed revenue targets.
Nearly 7 in 10 SMEs are expecting an increase in revenue over the next 12 months. With close to one third having let staff go during the pandemic, employment prospects are also set for growth with 46% intending to increase their headcount in 2021.
However, many have a lot of catching up to do in online business. With only 28% of SME revenue currently generated online, businesses are more aware than ever that on the back of pandemic restrictions, online needs to be a key component of their growth strategy.
More than half (52%) propose to increase the proportion of their sales generated through online channels in 2021. For 14% of SMEs, this year will mark the first time they begin to earn revenue online.
With nearly two thirds of the approximately 1.2 million SMEs in Australia intending to borrow in 2021, this means approximately 750-800,000 SMEs seeking funding.
The sector had $146 billion of funding lines in June 2020, which declined during the pandemic to $141 billion in March 2021. Based on this research, and the upswing Banjo is seeing in demand, this suggests lending to the SME sector will increase by around $5 billion between now and the end of the year.
A significant proportion (59%) of SMEs experience challenges when looking to secure funding to grow. Chief among the pain points are lenders who require property or assets as security, and lengthy loan approval times.
Drawn-out approval processes are undoubtedly prevalent in some parts of the banking sector. However, lenders with the right technology can give a small business owner an answer either way, within 24 hours.
The opportunity cost of not being able to secure funding when a business needs it – now – is too big to ignore.
After a competitive interest rate, SMEs find the most attractive feature in a lender is a simple application process.
Female business owners are much less likely than their male counterparts to borrow to fund growth, preferring to self-fund from operations. This is in large part because they are more averse to providing personal assets as security – regardless of how large or small their business is. There is also the question of where to turn for funding.
Acquiring another business (or being acquired) to grow is on the cards for 42% of those surveyed. SMEs chiefly turn to business advisors/consultants and accountants for advice on M & As, with other advisers coming a distant third or later.
Where expansion is concerned, NSW is the target for most. Interestingly, Queensland is on par with Victoria as a target, despite having a much smaller SME footprint than the southern, more heavily populated state.
Find out more by downloading your copy of the Banjo SME Compass report 2021 here.
As you are already aware, the Government Job Keeper Scheme has come to an end. So why not take advantage of this year's EOFY tax benefits. Below you will find our tips on ways you can benefit in these challenging times.
Three ways a business loan can benefit you this EOFY:
Using a business loan to take advantage of the Instant Asset Tax Write-off Scheme, which has been extended and benefit from the $150k (previously it was $30K) instant asset tax write-off* on any new equipment.
The Federal Government has extended its Economic Stimulus Package for the Instant Asset Write-off Scheme to assist businesses with purchasing assets to 31 December 2020. Companies with an annual turnover of up to $500 million can immediately write-off for tax purposes assets worth up to $150,000.
Instant write-off means you may be able to claim an upfront tax deduction for the business portion of your eligible assets - resulting in cash sooner than expected.
Suppose your business has an aggregated turnover of less than $500 million. In that case, you are eligible for the immediate tax write-off for the cost of your new or second-hand depreciating assets costing less than $150,000.
If your business's aggregated annual turnover is less than $5 billion, you are now able to write-off the total cost of new eligible depreciating assets within the specified timeframe. Small-to-medium businesses with an annual turnover of less than $50 million can also claim a deduction for eligible second-hand assets.
Depending on the size of your business, you can claim back on new or second-hand individual or multiple assets, so long as the cost of each individual purchase is less than the relevant threshold. Assets such as heavy machinery, business equipment or vehicles must be first held and first used or installed ready for use between 7 October 2020 to 30 June 2022.
ATO is tightening their post COVID-19 debt recovery processes. Here at Banjo, we are assisting those businesses experiencing short-term cash flow challenges and who may require settling their ATO debt.
This means the only way to fund cash loss is to either pump in more equity or to borrow funds. However, now that markets have re-opened, more businesses have been rebuilding. Businesses are currently arranging a settlement for the liabilities they owe to the ATO.
Did you know that businesses can borrow funds to pay all or a partial amount of these statutory liabilities to the ATO?
Instead of opting to use your residual cash flow towards the purchase of inventory, it may be beneficial to put this residual cash flow to use on high on return investment priorities. For instance, if you operate a manufacturing business and make a particular product with a high margin, you can put the funds towards this instead of using it to purchase inventory and opt for a business loan to purchase inventory, bringing those expenses forward to this financial year.*
If you'd like to chat with one of our friendly credit team members to learn more about how a business loan can benefit you this EOFY, please do not hesitate to call us on 1300 22 65 65. We'd be happy to help.
*We recommend you ask your accountant or financial advisor for taxation advice in relation to your specific circumstances
Small businesses in Australia are increasingly being led by women. In our experience as a lender, women’s approach to running an enterprise can sometimes give them the edge over their male counterparts.
Women are still under-represented in the leadership of ASX 200 and other large businesses in Australia – a recent article in the AFR stated that women account for just over a third of all managers in major Australian companies. This figure that has barely changed in the last 12 months. However, the picture in SMEs (small to medium enterprises) is very different.
According to the Xero Boss Insights 2020 report, the growth in the number of Australian businesses led by women is outpacing the growth in those led by men. In 2019, there were 1.4 million male business owners, up from 1 million in 1991, which is an increase of 40%. However, the number of female-led businesses grew by 80% in the same period, up from 420,000 to 800,000.
The same Xero report states that women have taken the lead over men in founding businesses in the healthcare, and education and training sectors. It suggests the pace at which the business ownership gap is being closed is likely to speed up during the 2020s, as more tertiary-educated young women develop their careers and approach the peak age for being their own boss at 45.
According to outgoing Small Business Ombudsman Kate Carnell, research has shown that for many women, starting a business provides the flexibility to work from home, the opportunity to pursue a passion, and the ability to better juggle work and family commitments.
As a lender, I can confirm that one of the defining characteristics we’ve noticed among our women clients is that they don’t appear to be as reluctant to ask the question everybody else is afraid to ask. It is often the answer to that question that leads to business improvement and efficiency gains. Or alternatively pivoting the business model to operate better.
An example of this is Banjo client, Fiona Horman, founder and Managing Director of Regency Media Pty Ltd. Under Fiona’s stewardship, Regency Media has expanded over its 35 years in business to become a diversified group comprising digital media manufacturing and distribution, licensing and publishing.
Its customers have included the world’s largest film studios and music businesses including Twentieth Century Fox, Sony, Disney, MGM, Icon, Madman, EMI and Mushroom Records.
Its licensing division Shock Entertainment sells physical entertainment products through JB Hi-Fi, Big W and Sanity. Regency’s publishing division Five Mile focuses on children’s books and publishes brands such as The Wiggles, Trace Moroney, ABC for Kids, Thomas the Tank Engine and Miffy.
By offering a full supply chain solution – manufacturing, warehousing, distribution and licensing – Regency has established a sustainable advantage over its competitors.
Fiona has this advice for women founding or running their own business, “Irrespective of your gender, it is important to be resilient. Always be prepared for the unexpected, it happens to everyone. Don't be afraid to ask for help and advice when you need it. To this end, it is extremely beneficial if you can find a good mentor to discuss all and any issues with.”
Another Banjo client Erica Hughes is the owner and director of the health food business Slendier. This fast expanding business began in 2013, with Erica purchasing the brand in 2017 with a strategy to grow the business in terms of geographic expansion, marketing and new product development.
Slendier focuses on all-natural, plant-based, healthy and delicious food that is genuinely good for you. Having come from a corporate background, Erica was looking to make a change and gain happiness through a new career journey that involved her owning and setting the strategy for her own business. The Slendier business now sells in both supermarkets and online channels throughout Europe, the Middle East, South East Asia, China, Australia and New Zealand.
Erica says it’s tough for anyone to own a global business right now and you need to back yourself with every decision. Erica’s advice for other female entrepreneurs is to “be confident, boldly step over each roadblock, seek out mentors and others who inspire you and also take time to look after yourselves”.
According to the Xero Boss Insights 2020 report, the growth in the number of Australian businesses led by women is outpacing the growth in those led by men.
Another perspective comes from Sonja Pfitz of Pfitz Financial & Business Solutions, a commercial finance broker for SMEs, specializing in local and global funding solutions for manufacturers.
Pfitz Financial has a wide range of clients from small to large companies, some of which are publicly listed, that operate in a range of industries including steel (metal), plastics, Defence, food & beverage, chemicals and medical sectors.
Sonja’s 25-year career in finance and in the ownership of various businesses has given her first-hand experience and insights into the funding challenges faced by manufacturing companies.
Sonja’s advice for SME women in manufacturing businesses is “Own your vision with passion and transparency. Be wise in surrounding yourself with specialists in their field to support you and the growth of your business. Never take a setback or not winning a client as defeat or failure, it is a challenge that will make you even more successful, from the lessons you have learned. Most of all take time to look after yourself… healthy mind & body is a healthy, happy effective director.”
Of course, the picture isn’t completely rosy, as there are still hurdles faced by women running their own businesses. Various studies, both local and international consistently show that women entrepreneurs are hindered by three main issues in comparison to their male counterparts:
International Women’s Day recently brought some great focus to women and their achievements. Hopefully, we’re getting closer to a time when women’s contributions and achievements are recognised as a matter of course, not just on a special day.
In this second part of our SME digital opportunities article, we look at how an online eco system of integrated software can make your life easier, free up your time and minimise effort. You needn’t be tied to your desk or office – you can set it up so you access your data from anywhere, using your tablet, laptop or phone. What’s not to love?
Among the functions that can be integrated are:
Start by subscribing to an online accounting software solution.
By moving your books to the cloud, you can get rid of the tedium of manual data entry that sucks up your time and resources. Typically, you’d connect the software to your business bank account so that your transactions flow automatically from the bank to the books. Because you can access your accounts from any web browser or from an app on your phone, your current financial position is at your fingertips at any time.
This includes things like income and expenses, and assets and liabilities. Most systems come with tools for quoting, invoicing, managing bills and so on.
What about security, you ask?
The information in the cloud is encrypted, similar to a bank’s, so only people with the login can see the data. However, you may want to include your accountant or other business adviser.
As it’s online software, there’s nothing to install or update – all your data is backed up automatically. More saving of time and effort.
Online point of sale software
Next, to your online point of sale software which can integrate a breakdown of all items sold, quantities, discounts, surcharges and payments (by tender type such as cash or EFTPOS) with your accounting system. This includes a summary of the amount of tax applied to each transaction.
No matter how much you sell, success ultimately comes down to the collection of the cash. Common traps include having no accounts receivable staff member, no collection process or late invoicing. Debt collection software makes the process simpler, more timely, and a lot less work.
For example, all account information will be stored in one central place, available on one screen. It allows you to automate invoices and attach PDFs to email. You’ll be able to automate sending invoices to your customers faster. You can automate your comms so customers they know they’re getting close to terms, when they’ve reached the due date, and later by how far they’ve passed it, without you having to do anything at all. This also helps to manage any disputes down the track.
By leveraging technology and integrating online tools, you can greatly improve efficiency and productivity, which should also lead to an increase in sales.
Inventory is the next small business challenge that can be conquered by an integrated digital app. There are various simple apps that let you ditch the spreadsheets and keep track of inventory items, even on the go via a tablet, smartphone or laptop.
The key components of an inventory management app are the tracking of the two main warehouse functions, receiving and shipping, but other features and optimisation can be added. For example, it can automatically enter dates and use your device’s camera to read barcodes.
HR (human resources) software
Finally, to HR (human resources) software. Many small business owners may think of HR as being something that only big companies do, but any business with staff has admin to manage. HR software helps you keep track of those tasks, data and processes.
Simple processes like annual leave and sick leave allowance, absence tracking, training and company policies can be automated via this software. No more hunting around in insecure filing cabinets for the employee records when they ask you for some time off!
At the more sophisticated end, it can help you manage onboarding and payroll, and streamline processes to increase overall productivity and work management.
Each of these individual software options are useful in themselves. By leveraging the technology and integrating these online tools, you can greatly improve efficiency and productivity, which should also lead to an increase in sales.
In business, as the saying goes, if you do what you’ve always done, you’ll get what you’ve always got.
You’ve probably been told numerous times that digital technologies and tools for your business will save you time, streamline your whole operation, and can enhance your business growth. Not to mention potentially reducing your stress levels.
So what’s holding you back?
According to an analysis by Deloitte Access Economics into the Benefits of Small Business Digital Engagement, 31% of small businesses said they were put off by what they perceived as the high cost of digital. A surprising 20% said they just hadn’t thought about it. And 13% said they were not sure how to use digital tools.
So let’s tackle these three inhibitors.
Of course there will be initial set-up and training costs. Yet failing to adopt technology will be far more expensive in the long run.
Essentially, the more digitally sophisticated a company is, the more likely it is to have higher revenues, better profits and increased staff potential.
Deloitte found that for every step they take up the digital ladder, businesses earn more revenue per employee. Businesses who had an advanced level of digital engagement, earned an average of 60% more revenue per employee, than those who had only a basic level of digital engagement.
2. Hadn’t thought about it
What are your business priorities? Ask yourself how you can enable those priorities with digital technology.
Whatever you feel you’re spending too much time doing, there will almost certainly be a digital solution for it. Would you rather focus on growing your business and sales, instead of working to produce reporting or doing admin?
A cloud based accounting platform will enable you to do just that. As long as you have an internet connection, cloud tools can be accessed from just about anywhere. You only pay for the tools that you use, and you can scale them up to meet your requirements as you grow.
A major benefit of cloud accounting platforms is being able to work collaboratively on them. Using an accounting platform that your accountant can access to review is much more efficient. It will give better, quicker reporting that’s more likely to be accurate. So when talking to potential lenders or strategic partners, everything you need is at your fingertips.
Businesses who had an advanced level of digital engagement, earned an average of 60% more revenue per employee.
3. Don’t know how to use digital tools
Maybe you’re still using time-consuming, manual processes, for example for inventory management.
Yes, technology can be initially daunting, but there are literally hundreds of experts out there. You may well have one among your family, friends or business advisers who’d be willing to walk you through a particular digital platform that could help you. The platform companies themselves can provide someone to give you a demo and answer all your questions. There are plenty of training programs to help you and your staff get on board.
Finally, the holy grail is software integration. Digital tools can of course be run separately, but integrating them - connecting them together – means even greater efficiency. You’ll have better oversight and be able to use analytics reports to help you monitor your business.
Here’s an example of software integration from business.gov.au:
Think of the huge time savings, and the ability to prevent you or your staff from updating wrong information.
No matter how small your business, digital technologies can help you build and be better at what you’re doing. Digital is no longer a “nice-to-have” for your business, it’s essential.