Business loans for wholesalers and distributors
HomeSec lends to wholesalers, importers and distributors 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 fits a business that pays a supplier deposit months before its own customers pay it.
See if you qualify in sixty seconds. No credit check to apply, no financials, no payments for the first six months. That's the HomeSec Advantage.
See if you qualifyThe cash cycle you are actually borrowing against
A wholesaler is a bank for its customers and a debtor to its suppliers, and the two cycles do not line up. An imported order typically takes a deposit on placement, the balance before shipping, then freight, duty and GST on arrival. The stock then sits in a warehouse until it is ordered, goes out on 30 or 60 day terms, and is paid somewhere after that. Money leaves months before it returns, and the gap is widest on the lines that sell best.
Currency and freight both move inside that window. An order placed at one exchange rate is paid at another, and shipping costs have proved capable of multiplying and collapsing within a year. Neither is within the business's control and both land on the cost of goods after the price list has gone out.
Customer concentration adds the last piece. Supplying a national chain or a large group is good business with immovable payment terms, and a wholesaler that wins a major account often needs more working capital in the first six months of it than in the previous two years combined.
What makes the phone ring
| The event | What it looks like |
|---|---|
| A container to be paid before it ships | The balance falls due to the supplier long before the stock earns anything. |
| Winning a large account | More stock, longer terms, and a float that has to exist before the first payment arrives. |
| A buying opportunity | A clearance, an end-of-line run or a favourable exchange rate that will not hold. |
| Debtors stretching | A major customer moving from 30 days to 60 consumes a quarter's margin in one decision. |
| A duty, GST or freight bill on arrival | Payable at the border, on stock that has not been sold. |
| An ATO balance | GST collected across the ledger and remitted before slow-paying customers have settled. |
What you can offer as security
Distribution businesses generally lease their warehouse, so the security is usually the owner's home or an investment property, assessed to 80% of value. Where the business owns its warehouse or industrial unit, that is commercial security assessed to 70% and will typically carry the loan on its own.
More than one property can be combined, the borrower does not have to be the owner of the security, and a first or second mortgage both work.
Stock and debtors are not security here. Trade finance and debtor finance facilities exist for exactly those assets and may suit part of the need; where they are exhausted, too slow, or unwilling to fund stock that has not shipped, real property is what remains.
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
A bank looks at a distributor and sees inventory it does not want to value, debtors that may already be financed, and thin percentage margins on high turnover. Trade finance from a bank is available but is documented, limited and slow to increase, and an increase is precisely what a new major account requires.
Two years of accounts also read badly in the year a wholesaler invests in growth, because the stock build and the debtor build both show up as deterioration.
We do not assess serviceability or value inventory. We assess the property and the exit — the stock selling, the account paying, a trade facility being restructured — and answer on the first call.
What the money is used for
- Paying a supplier or a container balance. Funded in days, repaid as the stock sells.
- Funding a new major account. The float for stock and terms in the first months of a contract.
- Taking a buying opportunity. Where the discount or the exchange rate is worth more than the cost of the money.
- Duty, GST and freight on arrival. Paid at the border so the stock is released.
- Clearing an ATO balance. Paid direct from settlement.
- Buying the warehouse. A first mortgage over the industrial premises the business rents.
From the call to the money
Tell us the deal
Amount, purpose, timing, the property and how the loan gets repaid. A Lending Manager gives you an indicative answer on that call — usually in minutes.
Minutes
Conditional approval
Photo ID, a rates notice and your most recent mortgage statement. That is the whole list, and it takes about fifteen minutes.
About 15 minutes
Funds released
As little as 24 hours from a clean, complete scenario. Paid where you tell us — to your account, or straight to the ATO.
As little as 24 hours
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.
Questions we get from this industry
Can you fund stock that has not arrived in Australia yet?
Do you take security over inventory or debtors?
Our warehouse is leased. Can we still borrow?
We just won a national account and need more working capital than we have. Is that a problem?
Do you need financials, aged debtors or stock reports?
Can we repay as the stock sells?
We have a trade finance facility that is fully drawn. Does that count against us?
Is this a short-term facility?
Not a call centre. Tell us the property, the amount and what the money is for, and you will have an indicative answer on the call. 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time.
The assessment is the same in every one of them: property, purpose and exit.
See if you qualify in sixty seconds
Three short questions, no credit check to apply and no financial statements. A Lending Manager reads it and calls you back with a real answer — not a call centre, not an algorithm.
That's the HomeSec Advantage.
Reviewed by Matt Hempel, National Credit Manager