I am a mortgage broker and my company contracts to the bank to sell home loans and related products. I have the chance to purchase an existing loan book but all the major banks are reluctant to lend against this type of security. Are there other ways to finance or invest in this purchase?
The reality of the lending situation today is that the big banks are hesitant to give small businesses a crack. The residential mortgage market is profitable for the banks, so they are concentrating their lending in that market. Because business lending is riskier and more expensive, the banks are pumping funds into home loans and side-stepping small business looking to break into the market.
The hard truth is that you'll probably have to borrow against your home or have the person who's selling you the loan book provide the funding and you can pay it off over time.
The loan book will provide you with a database of customers, so if you can get the business off the ground and start making some revenue, it would be a good option to look at vendor funding that you can pay off.
Mark Bouris is executive chairman of Yellow Brick Road, a wealth-management company and small business adviser that sells products and services for home loans, financial planning, insurance, superannuation, investments, accounting and tax. His advice here is intended as guidance only. Go to ybr.com.au.
If you have a question for Mark Bouris email it to Max Mason at email@example.com.