Business loans for mining and resources contractors

HomeSec lends to mining services, drilling, earthmoving and resources contractors against equity in real property, from $20,000 to $5,000,000, with no financial statements and no valuation. Funding in as little as 24 hours suits contractors mobilising for a tier-one client that pays 60 days after the month's work.

The cash cycle you are actually borrowing against

Mining services runs on the longest and least negotiable payment terms in the country. A tier-one miner or a principal contractor sets the terms, and 45 to 60 days from end of month is normal — meaning work done in the first week of a month can be paid more than three months later. The contractor funds wages, fuel, camp, flights and plant maintenance across that entire period, every month, on every site.

Mobilisation is a second, separate demand. Winning a contract means moving plant and people to a remote site, meeting the client's pre-qualification, insurance and safety requirements, and often buying or refurbishing equipment to the client's specification — all before the first claim. The cost of getting onto a site can exceed the first quarter's revenue.

The industry also moves in cycles that no single business controls. A commodity price, a project deferral or a client's capital decision can pause work with very little notice, and the contractor still owns the plant, still owes on it, and still has a crew it will need again when the work returns.

What makes the phone ring

What you can offer as security

The plant is almost always financed, and chattel mortgages over a fleet leave nothing available to another lender. Real property is what carries a loan here: a home, an investment property, a depot or workshop, or rural land.

A depot, hardstand or workshop is commercial security assessed to 70% of value; residential is assessed to 80%. Several properties can be combined, and the borrower does not have to be the owner of the security. Regional and remote locations are considered — towns of 3,000 or more people are the guide and smaller places are assessed on merit, which matters in an industry whose people often live where the work is.

Contracts, claims and the plant itself are not security here. If there is no real property anywhere in the group, we are not the right lender and we will say so on the first call.

How much you can borrow

Take the property's value, multiply by 80% for residential security or 70% for commercial, and subtract what is already owing on it. What is left is roughly what is available, between $20,000 and $5,000,000. Several properties can be added together, and the borrower does not have to be the owner — companies, trusts and sole traders — including start-ups, with everyone on title signing. Up to 80% on residential and 70% on commercial. Lower on large acreage, and LVRs may reduce on properties worth less than $800,000.

Why the bank is slow here, and we are not

Banks apply a sector view to resources services before they look at a particular contractor, and the view moves with the commodity cycle rather than with your contract. A business with a signed three-year contract can be assessed on the sentiment of the quarter.

Existing plant finance counts fully against serviceability even though the plant is earning, and two years of accounts across a cycle rarely look like a straight line.

We assess the property and the exit — the claim being paid, the contract running, a facility refinancing — and the plant finance does not reduce what is available because it sits over a different asset.

What the money is used for

• Mobilisation. Plant, people, camp and pre-qualification before the first claim.
• Bridging 60-day claims. Wages, fuel and maintenance until the client's cycle comes around.
• Plant repair, rebuild or purchase. Where asset finance will not fund an older machine or is too slow.
• Carrying a deferral or demobilisation. Holding the crew and the plant through a pause.
• Clearing an ATO balance. Paid direct from settlement, before it becomes a director penalty notice.
• Buying a depot or workshop. A first mortgage over commercial premises.

From the call to the money

What it costs

Priced per file, on the property, the position, the amount and the exit. No rate is published, because a rate with "from" in front of it is the best file's number. How it is priced, and every fee that exists.

Reviewed by Jason Brockmuller, Joint Chief Executive