Australian searchers: any recommendations for SMB banks?

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February 29, 2024

by a searcher from University of Guelph in Toronto, ON, Canada

looking for an Australian bank that sends to SMBs, any recs would be helpful, thanks in advance!

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Reply by a searcher
from University of Technology Sydney in Sydney NSW, Australia
It is difficult to get business loans from Australian banks, very difficult because they will ask you to fill in a document about your personal financial position which has nothing to do with corporate finance. Then you will have to provide a personal guarantee with all your assets and liabilities etc. Then they will ask you what is your contribution or as they like to say "skin in the game". That is simply stupid and it should be illegal because they mix personal finance with corporate finance, which defeats the purpose of having a company as a separate legal entity and you as a director having limited liability. They see no distinction, here in Australia, YOU ARE THE COMPANY and YOU ARE PERSONALLY LIABLE for your company. They simply make you contract out the Corporations Act 2001 and wave your rights with respect to piercing "the corporate veil" which is a legal concept that separates the personality of a corporation from the personalities of its shareholders and it protects them from being personally liable for the company’s debts and other obligations. THIS SHOULD BE ILLEGAL, but it is not.
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Reply by a lender
from University of Technology Sydney in Sydney NSW, Australia
As a commercial finance broker I can tell you that the appetite and leverage differs significantly between banks. Often Judo is cited as the go to, and generally for good reason as they have a higher risk appetite for acquisitions, however they have a higher cost of capital. If the combined leverage to EBITDA can remain under 2.5x then you have more options with the big 4 banks, however equity up to 50% of the purchase price, or other forms of security (read property) would be required. I would recommend trying to understand (or work with a commercial finance broker that knows) the credit and risk matrix for the banks to see if there are more lenient policies for specific industries, for example healthcare, professional services, or manufacturing. If you match the industry type to the banks risk matrix you have a better chance of higher leverage and the deal getting approved.
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