Having purchased a branch of a well-known fast food franchise, Damien Smythson was looking forward to beginning his small business. However, only 24 hours after the purchase, he received news that the company was being liquidated by the same bank that had approved his loan.
Because the lender that Damien received his business loan from was the same lender that moved to liquidate the franchise, he sought legal advice immediately.
Over the course of two years, the case made its way to the Supreme Court. When proceedings became too expensive for Damian to maintain, the bank agreed to settle at 75 per cent of the original loan, meaning he had to somehow raise that amount. Although the bank had agreed to a lower repayment, Damian’s situation did not present him in an attractive light to potential lenders.
“He came to us to see if we could assist with raising some funds against his property to pay the bank out,” Damian’s Finance Broker explains.
“With Supreme Court writs on the property and no payments on the loan for two years while he was disputing the matter, there weren’t too many lenders around that were prepared to listen.”
Damian’s broker set to work to figure out the best outcome and how to achieve it.
“We had a lengthy discussion and established that he had the capability of making repayments at a reasonable interest rate,” the broker says. “This debt problem was the first blemish on his credit file, and we were able to validate the dispute by giving copies of the Supreme Court writs and correspondence to show the situation for what it was to potential lenders.”
Following discussions with several specialist lenders, the broker was able to arrange finance through one, refinancing Damien’s existing owner-occupied home loan to incorporate the added debt.
“They were able to get him enough money to complete about 80 per cent of the settlement with the bank, and his family came up with the other 20 per cent to help him out,” his adviser says.
“He is a lot happier now than what he was before. Obviously the interest rate is above normal, bearing in mind the situation, but we also have a strategy in place to roll him out of that specialist lender back into the prime markets.”
This is just one example of the importance of having a good Finance Broker in your corner.