Business loan / Mortgage mix

Hi there - any of the finance specialists on the forum with experience structuring a loan on a bed and breakfast business with the premises as security? Borrowing capacity to take into account my personal income as well as the business profits. I would potentially consider using a part of the premises as PPOR.
 
The business income can be used but it be averaged out using the tax returns OR if recent is lower they will use the lower one + they will make adjustments in the income for the changes in "management style".

Really you will need a
- Cash flow forecast from your accountant
- Mini business plan
 
Really depends on the institution for a number of reasons:
1. Some might look at the asset as a "going concern" ? or combined value (building and business) and need to have it valued as such. The lender then adopts an LVR on that amount.

Benefits for this are that generally it will value higher than just the land and improvements valuation. This is because the valuer would apply a profit multiplier or a cap rate to the sustainable profit. This is all based on occupancy of course and your previous experience in the industry. If you are green then the bank will discount profits etc. as opposed to a seasoned operator.

Negatives would be that as the bank is extending against the value of the business they will require monitoring covenants in place such as quarterly or half yearly financial reporting. The valuations are also quiet expensive >$4K

2. Bricks and mortar valuation ? will probably allow a higher LVR to be applied but more than likely will be less than a going concern lend. Much easier then the above but will require financial projections from an accountant and the bank would more than likely like to see previous trading figures ? if an existing business.

A rule of thumb would be to work out how much equity you have and then multiply this by 2.85 to understand the property value you can afford.
 
Carefacer, Mick, Rolf - could either of you please help by providing a high level view of borrowing capacity? Happy to privately provide further details or have a phone chat.

Regards
 
Carefacer, Mick, Rolf - could either of you please help by providing a high level view of borrowing capacity? Happy to privately provide further details or have a phone chat.

Regards

Just give any of us a call / email/ PM.

Contacts as per Signature or mob: 0405536088 :)
 
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