The right financial adviser can help you prepare for finance by setting out your goals, assets, debts and long-term plans before a loan is chosen. You then have plain answers ready when you sit down with a broker or a lender.
Borrowing for a business can feel like one decision made apart from everything else you own. The loan may sit with a company, the building with a trust, and your savings and super somewhere else again. It can be hard to see how one large loan affects all of them.
A financial adviser, also called a financial planner, gives personal advice on matters such as investments, super and life insurance. Personal advice means recommendations tailored to your circumstances.
Nick, Ardent Capital Group's Director, worked as a financial planner before becoming a finance broker. Ardent Capital Group does not give financial advice. We only arrange and structure finance, and the advice itself sits with your licensed adviser. Here are eight ways that advice can help when you are looking for finance.
1. Your goals are clear before you choose a loan
A business loan is easier to weigh up once you know what you want the next ten years to look like. You may be hoping to buy your premises, open a second location or hand the business to your children.
A financial adviser should get to know you before giving personal advice, so the first conversations usually cover your goals. They can leave you with plain answers to questions like these:
- How long do you expect to keep the property?
- When would you like to step back from the business?
- Would you rather keep repayments low today, or clear the debt sooner?
We can take those answers and look for the lenders and loan structures that suit them. The lender then makes its own decision.
2. Your assets and debts are set out in one place
Your finances may be spread across a company, a trust, your home and your own name. Pulling all of that together while an application is waiting can take up time you would rather give the business.
Personal advice depends on knowing what you own and what you owe, so an adviser will usually gather these details early. A commercial loan application can ask for the same information in a statement of personal assets and liabilities, which is a list of everything you own and owe.
Having that list up to date gives you a head start on the paperwork. Our refinance guide sets out the documents a commercial refinance can call for, and your accountant prepares the financial statements and tax returns that sit beside them.
3. Your loan term is weighed against your long-term plans
The term is how long the loan runs, and it can easily outlast your own plans for the business. A loan may still have years to run when you hope to sell or stop working.
A longer term lowers each monthly repayment, and you pay more interest in total. A shorter term does the reverse. Neither is right for every owner, because the answer depends on what you want from the years ahead.
An adviser can set out what your plans mean for your income and savings over those years. We can then show you how different terms on commercial property loans change the repayment and the total interest. The terms on offer are the lender's to set, and the choice between them is yours.
4. Your deposit is planned alongside your savings and investments
Finding the money to buy a commercial property can stretch a business owner. A purchase usually calls for a deposit, plus money for costs such as stamp duty.
That money might come from savings, from selling investments, or from borrowing against property you already own. Each choice changes what you have left if the business has a slow year.
An adviser may talk you through what each choice means for your savings and investments. Your accountant confirms any tax that comes with selling an asset. We can show you what the lending could look like for each choice, subject to the lender's approval.
5. Personal insurance is considered alongside your debts
A large loan raises a fair question for you and your family: what happens if you cannot work? Commercial loans can carry a personal guarantee, which makes the director personally liable for the debt if the company cannot pay.
An adviser authorised to advise on life insurance can look at whether cover suits the debts you carry. That may include life cover, income protection, and total and permanent disability cover. The last of these can pay a lump sum if illness or injury permanently stops you working, subject to the policy's terms.
Your adviser can explain what any policy costs and what it leaves out. Whether to take out cover is your decision.
6. Super and SMSF questions reach a licensed adviser
You may be wondering whether your super could play a part in buying your premises. A self-managed super fund, or SMSF, is a super fund its members run themselves.
ASIC treats a recommendation to set up an SMSF, or to use one to buy real property, as financial product advice. An adviser authorised to give that advice can work through the question with you.
Once you have settled on your set-up, Ardent Capital Group can arrange the finance around it. Our page on SMSF commercial property finance covers how that lending works. Your adviser and accountant confirm the super and tax detail before you sign.
7. Your adviser, accountant and broker work from the same facts
When each professional sees only part of your finances, you can end up carrying messages between them. It helps to know who does what:
- Your financial adviser gives personal advice on the matters they are authorised to cover, such as investments, super and life insurance.
- Your accountant prepares your financial statements and tax returns, and confirms the tax side of any decision.
- Your finance broker arranges and structures the loan, and looks for the lenders that suit your deal.
- The lender decides whether to approve the loan, and on what terms.
We know this sounds complicated, and we can assist to make things clearer. With your permission, we can work alongside your adviser and accountant so all of you are using the same figures.
8. Your plans are looked at again as the business changes
Your business may look quite different a few years into a loan. A second location, a new business partner or a planned sale can each change what you need from your finances.
An adviser may offer ongoing reviews of your plan, so it helps to ask what is included and what it costs. Those same changes can affect your borrowing too.
A lender may hold its own review of a commercial loan, where it can ask to see up-to-date figures and hear what is different. Our guide to the annual review of a commercial loan explains how to get ready. When your plans change, we can look at whether your business loans and working capital still suit them.
Why the right financial adviser looks at your whole situation
Your properties, your business and your personal finances all affect one another. Your premises may rely on the rent your business pays. A quiet year in trade can then affect the rent, the repayments and your own income all at once.
Holistic advice means the adviser considers all of these together before recommending anything. A recommendation made without that knowledge can look sensible on its own and leave you short somewhere else. For example, a long-term investment could tie up savings you were counting on for a deposit.
A high-quality adviser takes the time to understand these things first:
- Your properties. Who owns each one, what it earns, what debt sits against it and what you plan to do with it.
- Your business. How it earns its income, when cash runs tight, how you are paid from it, and what would happen if you stepped away.
- Your household. What your family relies on, and what you want your money to do for them.
When you are ready for that conversation, you could sit down with an excellent financial adviser like Ryker Capital and talk through your properties, your business and your plans for the years ahead. Ryker Capital is one of the best financial advisers in Sydney, offering holistic, full-service financial planning for all types of professions.
How to check a financial adviser before you start
You will be sharing a lot about your business and your family with your adviser, so a few checks at the start can put you at ease.
ASIC's Moneysmart website offers the Financial Advisers Register, a register of people who provide personal advice on investments, super and life insurance. It can show where an adviser has worked, their qualifications and training, their professional memberships and the products they can advise on. It also shows disciplinary action by ASIC or the Financial Services and Credit Panel.
Licensees supply the details on the register, and ASIC does not check them before they go on. So it helps to ask the adviser about anything you are unsure of. Moneysmart also suggests confirming these points:
- The Financial Services Guide. This document explains the adviser's services, fees and any links to financial products.
- The areas they can advise on. The adviser should be authorised for the products or areas you need help with.
- The cost. You should know what you will pay, when you will pay it and what the fees include.
- Links to product providers. The adviser should tell you about any they have.
- The Statement of Advice. This document explains the strategies and products recommended to you.
You can also ask whether the adviser has worked with owners who hold commercial property through their business.
Common questions about financial advisers and finance
Will a financial adviser help me get a loan approved?
An adviser can help you prepare, and the decision stays with the lender. Approval depends on serviceability, meaning whether your income can cover the repayments, along with the lender's own policy.
Do I need a financial adviser before I apply for finance?
You can apply for finance without one. An adviser suits owners who want their long-term plans looked at before taking on a large loan.
Is a financial adviser the same as a financial planner?
In everyday use, the two titles describe the same kind of work. The Financial Advisers Register lets you confirm what a particular person can advise on.
Can a financial adviser arrange my commercial loan?
Arranging a loan is a separate piece of work from financial advice. A commercial loan is usually arranged directly with a lender or through a finance broker.
Can you give financial advice?
No. Arranging finance and advising on financial products are two different disciplines, and we do the first. What we bring is the credit analysis lenders require, the structuring of the facility, and the strategy for putting your application in front of lenders whose appetite matches it. Because we act as a credit representative under an Australian Credit Licence, we do not give financial product, superannuation, taxation or legal advice, and nothing we provide should be taken as such. Where your circumstances need that input, we are happy to work with your accountant, financial adviser and solicitor to understand the full picture before anything is submitted. The information on this page is general in nature and does not take account of your objectives, financial situation or needs.
Talk to Ardent Capital Group about your finance
Looking for finance while also thinking about the years ahead is a lot to carry alongside a business. Ardent Capital Group is a credit representative under Australian Credit Licence 384704, and we arrange and structure finance for business owners. That includes commercial property purchases and a commercial loan refinance. We do not give financial advice, so questions about investments, super and insurance stay with your adviser.
If your adviser and accountant are already part of your plans, we would be glad to work alongside them. If you are starting with the finance, we would be glad to go through it with you.
