Business loan for a shop front with 0 deposit

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: Business loan for a shop front with 0 deposit

Post by Otto Dargan »

Hi and welcome to the forums MmM.


Lenders see risks in financing businesses with no deposit or residential property as security. Are you parents in a position to help?

A business loan with a guarantor allows you to borrow 100% of the commercial property value or the need for a residential property as security.

Your Mum and Dad, acting as the guarantor, can borrow up to 80% of the property value they own in equity to guarantee your business finance. The commercial loan would allow you to
  • Borrow the full amount you would need to buy a retail shop front for your new business without any deposit.
  • Limit your liability should you default on the commercial property loan.
  • Get cheaper commercial interest rates -- sometimes up to 5 or 6 points cheaper -- by using a residential property as the security guarantee.
Also, you don’t need your parents or immediate family members to be your guarantor for a business loan. Your business partner or friends can also be a guarantor.

We’re happy on your progress and hope to help you expand your business. You can call us on 1300 889 743 to find out more about business loans. You can also fill in our free assessment form and one of our business finance specialists can help you.


Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Business loan for a shop front with 0 deposit

Post by Otto Dargan »

Hi MmM.
If you’re not looking to use a residential property such as your home or an investment property as a security, you can use one of the following standard commercial properties:
  • Offices
  • Factories
  • Warehouses
  • Shop fronts
Lenders also accept specialised commercial properties, depending on your case. However, you'll be limited to how much available equity you can use which means you'll need to come up with the shortfall with cash.
Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Business loan for a shop front with 0 deposit

Post by Otto Dargan »

Hi MmM,
You probably have a thousand things running in your mind. As a guarantor, you’d be trusting your friend to meet their business loan repayments, pay down the loan, and eventually remove you as the guarantee. Moreover, you could be at the risk of losing your security against the loan.

I'm sure he's a trustworthy and reliable friend, otherwise, you wouldn't be considering acting as a business loan guarantor.
To stay on the safer side, you could:
  • Ask your friend for a business plan
  • Seek financial and legal advice to learn about the risks involved with a business loan.
  • Have a formal agreement in place drafted by a solicitor
We provide a whole heap of tips that you should know if you're thinking of acting as a guarantor for a business loan.

Alternatively, ask your friend to make an online enquiry with us and to tell us all about his business plans and what he needs the business finance for.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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