Servicing your borrowings
The processes of repaying a loan, both principal and interest payments along with any fees, are known as loan servicing. So, when a lender talks about a customer’s ability to service a loan, they are simply looking at your ability to make repayments on the borrowed amount.
Before agreeing to provide finance, any finance company is going to take a close look at your ability to service a loan. They will consider your current debt portfolio, your assets, cash surplus – both current and proposed, liabilities, turnover, cashflow and your finance and repayment history. This information is put in context of the market (how is your industry performing) and your plans for your company (are you growing or getting ready to sell?).
Here is where you will feel the real benefits of using a finance advisor rather than dealing directly with a lender, or several different lenders. At Finance New Zealand, your advisor will assess your business finances – ensuring the content and quality of information provided will meet the necessary requirements and create a positive impression with a lender – before presenting this information to one or more specific lenders who we know will be best suited to working with you. Sometimes this is a mainstream bank, sometimes this is a specialist lender with a better appreciation of your industry and the equipment you need.
If you are struggling to service a current loan, your advisor at Finance New Zealand is also able to give direction on how your finances could be better structured to facilitate your loan repayments – whether this is by way of a bridging loan, cashflow or seasonal loan to tie you over while business is quiet, or by refinancing assets so your repayment amounts are less demanding – via a better interest rate or a longer term loan, for example.
Perhaps you find the business accounts are in surplus – now could be a great time to relook at all your borrowings and restructure your debt to get your money really working for you.
Talk to your business partner at Finance New Zealand about getting the finance you need for your business, with servicing terms that suit.