Commercial borrowing power

With tightening lending criteria, the knowledge and experience of a good commercial loan specialist can be invaluable.

Commercial loan specialists have an important role in helping you obtain finance.

The amount you can borrow will be determined on a case-by-case basis. A good commercial loan specialist can help determine your borrowing capacity based on a number of aspects such as the industry you are in and the type of security you have.

Generally, your borrowing capacity will be expressed as an interest cover multiple. Interest cover equals your net income before tax and depreciation divided into interest expense.

A fully secured loan such as a commercial property loan restricted to a maximum loan-to-value ratio (LVR) of 65 per cent may be based on an interest cover multiple of 1.25 -1.5 times.

A business loan secured by cash flow and/or partly secured by property may need an interest cover of three times or more.

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