Commercial Broker Guide

Transcription

1 Commercial Broker Guide

2 With a wealth of experience across a wide range of industries, St.George brings both knowledge and confidence to your business decisions. Use this quick and easy guide to reference any deal you might have in any industry. Do remember that this is intended to give a guide only, and that all applications are looked at on an individual basis so feel free to contact one of our Commercial Business Development Managers to find out what we can do for you. Industry Self Managed Super Fund (SMSF) 30 years (Residential) 2 (Commercial - non-specialised) $200,000^ $5,000,000 Up to 70% (Resi - Corp Trustee) Up to 72% (Resi - Individual Trustee) Up to 65% (Comm - Corp Trustee) Up to 58.5% (Comm - Individual Trustee) Self Managed Super Fund Properties acquired by a Self Managed Super Fund The Borrower is the SMSF trustee (either a non-trading company or at least 2 individuals) For individual trustee SMSFs, there must be two trustees - with one of them being the member. If the fund member is an employee of the other trustee, the fund member and the other trustee must be relatives. The Security Custodian must be a company who holds the property in trust for the Trustees of the SMSF until the loan is repaid in full Security Custodian must be a corporate entity ^ Please refer to your Commercial BDM for SMSF under $200,000 Servicing Net rental after expenses or 80% of rental if no expense information is available PAYG Contributions 9.50% Additional Contributions to Super from PAYG Salary Level of liquid assets (e.g. shares, cash deposits, government bonds) to be held in SMSF after settlement of property purchase: 10%* of total SMSF assets * If the SMSF cannot meet this asset test, then assets held in a related APRA superannuation fund can be considered, as well as the ability of the members to meet their ongoing superannuation contributions Cashflow Solutions Invoice Discounting (ID) and Invoice Discounting Plus (ID Plus) ID and ID Plus are provided to assist with working capital finance requirements by accelerating the cash conversion cycle and linking availability of cash to the business cycles. It is particularly useful where businesses operating within appropriate industries are experiencing strong growth or have seasonal requirements revolving facility Minimum term is determined by the Cashflow Finance Specialist Team No maximum term $200,000 for ID and $1,000,000 for ID Plus No maximum ID Up to 85% of approved trade receivables ID Plus An agreed % of stock in trade after adjusting for priority creditors and other reserves Trade Finance Trade Finance is a specific form of working capital made available for companies involved in international and domestic trade. It is offerred in most major currencies and can be used for legitimate pre/post shipment export or import funding.it is utilised in conjunction with globally recognised trading instruments including Letters of Credit and other acceptable trade payment methods Based on short term cost of funds interest rate for AUD or major foreign currencies The funding of trade loan individual transactions is generally for 14 days minimum The funding of trade loan individual transactions is to a maximum of 180 days Overall Trade Finance Facility is generally for 12 months revolving - however it can be for a lesser term in instances of one off or customised trade contracts Overall facility $250,000 Due to the specialised nature of these types of funding requirements there is no set criteria, each application for trade finance must therefore be referred to the local trade finance specialist Nil Security is subject to variation and is dependent on the specific trade funding requirement. A variable risk margin is also applied over cost of funds rates Independent Supermarkets Independent Supermarkets This policy is limited to IGA and Foodworks groups. Finance is available to cover refurbishment of existing store and/or purchase of existing store EXISTING SUPERMARKET 1 (freehold) (leasehold) or remaining term if < REFURBISHMENT (freehold) (leasehold) or remaining term if < A minimum of specific supermarket experience. This can be mitigated by retaining or hiring employees who have appropriate supermarket experience The last 3 years financials are to show a profitable performance with no deterioration in business net assets Up to 50% of purchase price (single site operators) Up to 50% of purchase price (multi site operators) + up to 80% EBITD of already owned store Requisite Performance Indicators to be meet: Interest Cover ( EBIT/Total Interest ) > 3.0x Profitability (Gross Profit/Sales) > 20% Profitability (EBIT/Sales) > 3% Gearing (Total liabilities/total tangible assets) < 75 % Debt service cover (EBITD/Total interest + Principal payments) > 1.2x Stock turn days (Average Inventory/COGS x 365 days) < 25 days

3 Professionals Accounting Firms/ Partners Purchase of accounting practice, establishment of new practice, working capital, items of a capital expense nature. (fully amortised) 3 years (with the fully amortised) 3 years professional experience Net worth to be consistent with partner s experience and age Charge over Business Assets (GSA) Assignment of key man insurance Partnership/ Firm Charge of debts, operating as a floating charge and including a Deed of Accession. Company Fixed & Floating Charge Directors Guarantees $500,000 Nil Up to 60% of actual gross fee income or Projected income (Practice without FP Arm) + Up to 2.5x Financial planning renewal income (EBIT) multiple (Practice with FP Arm) Interest Cover > 1.75x Net Profit margin before partners salaries > 25% WIP Days Outstanding < 70 days Debtor Days Outstanding < 70 days Total Cash Lock up (WIP + Debtors) < 125 days Cash Available for debt servicing 1.2 : 1 Client concentration - no client to generate > 10% of revenue Average fees per partner > $500,000 Profit per partner $140,000 (Working Capital) 2.5 x adjusted EBITA less partners draw Working Capital Request GSA Assignment of Keyman insurance Consulting Engineers and Quantity Surveyors Firms seeking finance against cashflow for supplying consulting engineering services in the areas of design and management of infrastructure projects, environmental projects, industrial processes and equipment (Residential Property Purchase) 30 years 3 years professional experience Certificate of currency showing the level of current professional and indemnity insurance held by the firm/principals/partners (to the satisfaction of the Bank (i.e. - AA and above) Net worth of $500,000 per partner / principal (assets held jointly with spouse) Turnover >$2m per year $500,000 Up to $2,056,500 (90%) Residential Property Purchase up to 90 % without LMI (Under $2.285m) Up to 70% (> $2.282m) Interest Cover > 2.5 Operating Profit before tax (% of revenue)= Range between 10% - 20% Gearing (Total Liabilities/Total Assets) > 50% Wages (% total expenses) < 40% Maximum reliance on a single debtor (% of total revenue) < 30% DEALER MEMBERS New = 2.25 x renewable income or 70 % purchase price or 3.75 x EBIT Existing = 2.25 x renewable income or 3.75 x EBIT Financial Planning To purchase an existing portfolio (can include buying out an outgoing director), working capital up to $50,000, refit of premises or refinancing of existing (at least 50% of the debt must be repayable in ) Are authorised representatives / members of an accredited dealer group or Independent advisors (where renewal income and FSR compliance can be verified) Have a minimum annual revenue of $750,000 Where the Bank holds (or will hold) the main operating account Minimum of industry experience with a minimum of 3 years experience running a successful financial service business Ability to demonstrate the consistent application of business processes and service (e.g. process documentation supporting consistent delivery of service) strong and stable personal financial position FSR compliant Interest Cover > 2.0x Profitability [EBIT / Gross income] > 20% Profitability [renewable income / Gross income] > 50% Gearing (Total liabilities / total assets) < 70 % INDEPENDENT ADVISORS New = 1.75x renewable income or 50% of the purchase price or 2.6 x EBIT Existing = 1.75x renewable income or 2.6x EBIT Up to 3 years (within overall 10 year term) Up to 60% of the valuation as determined by the St.George Multiplier Insurance Brokers Insurance brokers /underwriters (including companies, partnerships or sole traders) Minimum of industry experience Minimum of 3 years experience running a successful insurance broking/ underwriting business Strong and stable personal financial position Evidence of current AFS licence For Insurance Underwriters: Copy of all current binder agreements Minimum total Gross Written Premium (GWP) $1m Break-up of GWP placed with various Insurance Companies Minimum number of product lines: 3 No one supplier is to exceed 30% of the Underwriting Agency s GWP Min annual revenue of $600,000 Interest Cover > 2.0 x OR > 1.5x (where secured by real estate) EBIT / Gross income > 20% of revenue Client concentration - no client to generate > 20% of revenue

4 Legal Practitioners/ Partners Purchase of proactive, establishment of new practice, working capital, items of a capital expense nature and superannuation contributions. Up to 3 years (within overall 10 year term) Principal / partners are to hold a professional practicing certificate from the applicable State Law Society / Law Institute or Bar Association 3 years professional experience The Bank is, or will become the principal account manager for the customer Net Worth to be consistent with partner s experience and age $500,000 Nil Up to 60 % of actual gross fee income (assessed on a 12 month rolling basis) or projected income in case of a material change Interest Cover > 1.75x OR > 1.5x (where secured by real estate) Net Profit margin before partners salaries > 25% WIP Days Outstanding < 120 days Debtor Days Outstanding < 90 days Total Cash Lock up (WIP + Debtors) < 180 days Cash Available for debt servicing 1.2 : 1 Client concentration - no client to generate > 10% of revenue Average fees per partner > $500,000 Profit per partner $140,000 Management Rights (QLD Only) Acquisition of Management rights businesses in well located properties. Includes purchase of the business and the Manager s unit (as a freehold). BUSINESS ASSET EXPOSURE Principal and Interest BUSINESS ASSET EXPOSURE MANAGERS UNIT EXPOSURE Principal and Interest MANAGERS UNIT EXPOSURE Remaining agreement term up to 1 (so long as loan term can be repaid within max term remaining) 2 $200,000 Nil Up to 70% of Purchase Price (inclusive of manager s residence) Proven Industry experience (min. 3 years) At least 40 units under management Ability to demonstrate strong marketing and customer service skills Favourable reference from previous Body Corporate Evidence that restricted letting agents licence is held Adequate insurance to cover (Public Liability, Professional Indemnity, Loss of income, Office Contents, Home contents, Fidelity) Interest Cover (EBIT/Interest) > 175x Debt Service Cover (EBITDA/[Gross Interest Expense + Gross Principal Repayment]) > 1.0x Health & Community Services PURPOSE BUILT OR LEASEHOLD RESIDENTIAL CONVERTED 1 FREEHOLD up to 70% (purpose built) up to 80% (residential cover) or up to 70% Greenfield Child Care Purchase of existing Child Care Centre, purchase of additional Child Care Centre, converting commercial or residential premises in Child Care Centre or Child Care Centre being built by applicant (Greenfield), Superannuation contributions Up to 3 years (Once loan is < 50% going concern) Be an approved Long Day Child Care Centre, receiving the Commonwealth Government s Child Care Benefit ( CGCCB ) which requires an applicant to: Operate for at least 8 hours per day for a minimum of 48 hours per week Hold valid accreditation / licence(s) from the relevant State / Territory government/ regulatory authority Hold valid Local Council Development Application and Building Application approval Hold valid State Department of Community Services licence Preferably be a member of the applicable State based Child Care Association Have at least 3 years experience in the Child Care industry or similar industry Multi-site owner/operator, in addition to the criteria below, should also have demonstrated their ability to operate / manage multiple sites (business management experience / qualifications) Child Care places > 25 Occupancy levels > 80% Interest Cover > 2.0 x Wages and Salaries (+ on costs) / Total income < 60% Income per fulltime Child Care place > $8,880 p.a. NPBT (before owners drawings) per fulltime Child Care place > $3,500 p.a. LEASEHOLD up to 35% provincial area or up to 50% metropolitan

5 $2m and Under Up to 95% of MV PRACTICE PREMISES Between $2m and $2.4m Up to $1.9m (excludes Greenfield) PRACTICE PREMISES COMMERCIAL 1 CONVERTED RESIDENTIAL 2 $250,000 More than $2.4m (max $15m) Up to 80% MV (excludes Greenfield) $2m and Under Up to 90% MV Between $2m and $2.4m Up to $1.8m More than $2.4m (max $15m) Up to $75% of MV $1m and under Up to 100% of MV Medical Lending Registered medical/ dental/veterinary practitioners, medical clinics or group practices including specialists, in private practice, partnerships or companies, seeking finance against cashflow. PRACTICE ONLY $250,000 Between $1m and $1.4m More than $1.4m (max $15m) $1m and under Up to $1.0m Up to 70% of MV PRACTICE ONLY Between $1m and $1.4m Up to 70% MV More than $1.4m (max $15m) All Practitioners are to be registered with the relevant professional regulatory body Medical and Dental practitioners must be able to provide evidence of a Medicare provider number A minimum professional experience of 3 years A clear credit history and satisfactory credit assessment Certificate of currency showing the level of current professional and indemnity insurance held (to the satisfaction of the Bank) Income protection and term life cover where reliance on business assets exceeds $100,000 Practice Premises = Owner Occupied medical/dental/veterinary premises being either built or converted (Resi/Comm) Practice Only = Owner Operated medical/dental/veterinary practice being purchase/established by applicant Interest Cover (EBIT/Total Interest) > 1.5x (secured by property) or 2.0x (all Other) Debt Service Cover ([EBITDA] / [Gross Interest Expense + Gross Principal Repayment]) > 1.0x (Min 50% Amortisation required) 3 years (subject to review) $500,000 Nil Up to 65% against net Freehold going concern FOR CONSTRUCTION Up to 75% of cost (including land value and AIPS) or up to 65% of pretrading (day one) going concern + 70% of the net amount of uncollected acc bond Residential Villages/Residential Aged Care Purchase and construction of new freehold sites, purchase of existing mature Retirement Villages, freehold/ leasehold improvements or repurchase of a unit Beds: up to 65% of going concern valuation by a bank instructed valuer. Facilities >60 beds may be considered where part of a group. Non-Construction: Fixed & Floating Charge (over all assets including rights and licences), Directors Guarantees Construction: Fixed & Floating Charge (over all assets). Tripartite Agreement between the Bank, client & builder, Directors Guarantees Specialist panel valuer to provide a going concern valuation, addressed to the Bank for the purposes of mortgage, and is to be found satisfactory to the Bank Evidence that the Aged Care facility is an Approved Provider, Accredited and Certified and holds all other relevant licences Evidence that operator has in place an appropriate Liquidity Management Strategy (LMS) to comply with the User Rights Principals of the Aged Care Act 1997, to cover working capital requirements. Operator must be able to demonstrate access to sufficient funds to meet this requirement Evidence that the ACF holds current accreditation and certification certificates issued by the Department of Health and Ageing (DoHA) or other relevant Federal Aged Care Standards and Accreditation Agency (Agency) Evidence of all allocated places, extra services places or community care packages issued to the approved provider in respect of the ACF Satisfactory evidence of compliance with all statutory and regulatory obligations in relation to the operation of the residential aged care facility A current schedule of all accommodation bonds, resident agreements or other agreements or contracts that exists between the Approved Provider and any care recipient Copy of external audit certificate evidencing the maintenance of agreed liquidity related to the accommodation bonds (Note: Liquidity arrangements require approval by Commonwealth Department of Health and Aged Care and are to be submitted annually)

6 Pharmacy Acquiring a pharmacy, refinancing an existing wholesaler guaranteed loan, business expansion including purchase of freehold. Improvements and shop refits. All borrowings are to be pharmacy related or part of a personal superannuation retirement strategy General Security Agreement to be taken over all pharmacy assets including goodwill Mortgage over lease premises is preferred Right of Entry (St.George Banking Group) over leased premises from mortgagee/landlord $250,000 Nil 75% of going Concern (Greenfields - Existing/additional Pharmacy or 70% only for Big Box stores) 60% (Greenfield / Brownfield site) Profitability (EBIT / Sales) > 8%, Gross Margin > 25%, (Wages +Rent /Sales) > 25% Interest Cover (EBIT /Total Interest) > 2.0x Efficiency (Stock Turnover) > 6.0x Working Capital (Current Assets / Current Liabilities) > 1.10x Creditor Days < 60days Equity (Net Assets / Total Assets) > 30% Hospitality Pubs, Bars, Taverns, Motels and Hotels For acquisition of or improvements to drinking hotels. (debt to reduce to 40%) 3 years Minimum 3 years industry experience as a successful publican or as a successful hotel manager, in an equivalent operation is required Demonstrate the ability to service debt Proof of a detailed maintenance / refurbishment plan at no more than 3 to 5 year intervals, supported by professional advice in need Individual hotel performance will depend upon the mix of various cost centres within the establishment, and will cover (as applicable): Bar, Gaming, Nightclub, Bistro, and Packaged liquor $250,000 Nil Freehold (with gaming): up to 65% Freehold (without gaming): up to 50% Leasehold (with gaming): up to 50% of going concern valuation by a bank instructed Valuer. Interest Cover (EBIT/Total Interest) > 2.0x Debt Service Cover > 1.0x EBITDA to be no less then 80% of that used in the last going concern valuation Registered Clubs Finance for Licensed Recreational Clubs. Profitable, wellmanaged, medium to large clubs with a strong competitive advantage in their local market. (Fully Amortised) Not Available Stable and competent directors preferably with a background in business / finance, and Competent secretary-manager / financial controller / general manager with appropriate professional and industry qualifications Verifications Required Quality of the liquor licence, gaming licence and security property Name of licensee and determine the status of the licence (i.e. special conditions, complaints, etc.) Level of fees and currency Special entertainment approvals (e.g. by local council) Number of Members > 5,000 Number of poker machines > 80 Total Financial debt / EBIT < 4.0x Poker Machine revenue (i.e. gross less payout) Per Machine / Year > $40,000 Proportion of total revenue > 55% Gross wages / banked turnover (i.e. net poker machine revenue after payouts + gross bar revenue + members subscriptions received) < 20% Bar Gross Profit > 50% Gearing (total lending/total assets) < 60% Debt service cover (EBIDA/total debt repayments) > 2.0x Up to 50% (continuing use value) or up to 65% (alternative use value) Whichever is lower

7 Property Principal and Interest (property must be revalued at year 3) DEVELOPMENT 3 years INVESTMENT DEVELOPMENT $2,000,000 INVESTMENT $100,000 $20,000,000 DEVELOPMENT Up to 75 % LDCR or up to 65 % LVR on completion (whichever is lower) INVESTMENT Up to 70 % current market value Property Development/ Investment Development and investment finance for commercial property Development Registered first mortgage/s over property being developed General Security Agreement (GSA) over all of the developer s / owner s rights and undertakings in respect of all security property, including pre-sale deposits where appropriate as well as project documentation Directors / shareholders guarantees Other documentation necessary to achieve appropriate control and permit completion of the development in event of customer default (e.g. builder s side-deed (if construction budget is greater than $5m net of GST) Rights to designs, intellectual property, etc. relevant to the development) - it can be necessary to join other parties (e.g. external architects) into documentation to achieve this. Investment Registered first mortgage/s over security property General Security Agreement (GSA) over all of the investor s/ owner s rights and undertakings in respect of all security property Directors / shareholders guarantee. Rent Rolls Specifically to assist in the purchase of Rent Rolls (larger businesses with at least 200 properties under management) Principal and Interest 3 years Minimum 3 years experience Hold a current Real Estate Licence Incorporated: Fixed & Floating Charge plus Directors Debt and Interest Guarantees Unincorporated: Bill of Sale Note: Security over the rent roll must not be the primary security. Preferably, freehold security by the principals/directors is also to be held in all instances $250,000 $5,000,000 Up to 60% purchase price or independent valuation (which ever is lower) Less then 50% LVR purchase price or independent valuation (which ever is lower) Net advertising, salaries and rent (% of net revenue or gross profit if client record COGS) < 50% Net Profit Margin (NPBT over gross income) > 25% Gearing (total business liabilities / Total business assets) < 70% Interest Cover (EBITA / Total Interest) > 2.5x We re blazing a trail to help you grow your business We ve created something special for our valued brokers - a first for the industry where you can now lend against your trail book. Fund your business growth Purchase existing Finance Broker trail books Working capital up to $50,000 Succession planning Refit or refurbish your offices Refinance existing borrowings (for purchase of Finance Broker trail books or business) Please visit blazingatrail.com.au/stgeorge Information current as at July The information included in this document is not designed to be product/policy specific and is a guide only intended for internal staff and accredited broker reference. It is not intended for customer reference. St.George Business Credit Policy applies. For specific policy details please contact your Commercial Relationship Manager. *State variations apply **State variations and gaming restrictions apply ***Some exposure restrictions apply St.George Bank A Division of Westpac Banking Corporation ABN AFSL and Australian credit licence

8 Commercial Broking The following information is not designed to be Product/Policy specific and is a Guide Only for Internal/Broker use. Security type Guidelines Owner Occupied Commercial Property Investment Commercial Property Up to 65% / P&I Up to 70% - / P&I Residential & Rural Secured Up to 80% * Business/Commercial Solutions Guidelines Cashflow Solutions Professionals Accountants, Financial Advisors, Legal Professionals, Insurance Brokers Health & Community Services Residential Aged Care Community Pharmacies Hospitality** Pubs, Bars & Taverns, Motels & Hotels, Registered Clubs Our Cashflow Finance Specialists assist businesses with leveraging key Balance Sheet Assets, primarily Debtors and Stock. Our expertise resides in understanding the key factors influencing realisation / collection of the assets. - Up to 60% of accounting fee income or projected income - Up to 1.75x renewal income, or 2.6x EBIT - Up to 60% of gross fee income or projected income - Up to 60% of Business Value (1.25x-1.75x commissions) - Up to 65% of Going Concern Valuation (freehold) - Up to 75% of Business Value (Established Pharmacies) - Up to 60% of a Going Concern Valuation (freehold) - Up to 65% against Going Concern Valuation (freehold) - Dependant on Clubs individual financial circumstances Property Development, Investment*** Self Managed Super Fund (SMSF) Finance Broker - Up to 75% of Total Development Costs on Construction loans (or 65% of the on completion value, whichever is less) - Up to 80% of Residential Property - Up to 70% of Commercial Property - Up to 70% of Residential Property-(Corp Trustee) - Up to 65% of Commercial Property-(Corp Trustee) - Trail Book Finance available - see inside for more details us today commericalbroker@stgeorge.com.au Visit us today stgeorge.com.au/brokers stgeorge.com.au Information current as at July The information included in this document is not designed to be product/policy specific and is a guide only intended for internal staff and accredited broker reference. It is not intended for customer reference. St.George Business Credit Policy applies. For specific policy details please contact your Commercial Relationship Manager. *State variations apply **State variations and gaming restrictions apply ***Some exposure restrictions apply. St.George Bank A Division of Westpac Banking Corporation ABN AFSL and Australian credit licence STG 07/15