Many small to medium size enterprises (SMEs) continue to be faced with financial challenges due to COVID-19. We sat down with Ben Vanderkop, Senior Relationship Manager in TPT Wealth’s Commercial Lending team, and talked about some of these challenges and the important factors to consider when applying for a commercial loan.
What are some of the challenges your clients have come up against in response to COVID-19?
Initially the border closure and social distancing measures were a big shock for all business sectors in the Australian economy. Hotels, restaurants and retail have been hit particularly hard, but assistance measures such as JobKeeper have been critical support in covering staff wages, which for a majority of businesses represents the largest fixed cost.
The main challenges for my clients have been the impact to cash flows (particularly in the tourism and retail sectors) and navigating through the types of financial assistance available from both the government and non-government sectors. In many cases, we have been able to help our commercial lending clients through the deferment of payments on their loans. This was particularly helpful during the height of COVID-19 as businesses were still coming to terms with the impact and then trying to ascertain what type of support was available.
How have your clients been able to adapt and respond to the challenges?
The extent greatly depends on the type of industry they are in and their business’s size. For instance, most retail relies heavily on local clientele. In many areas, people were allowed to and have felt more comfortable to venture back out, go shopping and dine in restaurants, which facilitates the recovery.
Retail shop and office building owners on the other hand were for the most part able to negotiate terms with their tenants so that rents have been reduced whilst trade was down. Thankfully, in most cases rents appear to be back to near pre-COVID levels as trade has increased to near normal volumes again.
How is business confidence now compared to 7 months ago?
I would say that business confidence has definitely improved and is almost back to pre-COVID levels. One sector that has proved extremely resilient and has continued to grow, is the property market in Tasmania. Real estate prices and the average days on market continue to outperform most other areas around Australia. There are several large land sub-divisions in Hobart (Kingston Spring Farm, Whitestone Point and Oakdowns) where demand for vacant residential land continues to be strong. With less competition coming in from the mainland right now, local buyers and investors are getting involved. We see this as an indicator for the local economy regaining its strength.
How is TPT Wealth Commercial Lending assisting with the economic recovery?
Our team has a solid understanding of the local economy because most of our staff are here on the ground in Tasmania. Our Tasmanian clients can be confident that local factors are taken into consideration when assessing commercial loan applications. We did not stop lending through COVID-19 and we continue to have confidence in the economic recovery. We offer a number of innovative lending products such as our SMSF loan that can help with the purchase of residential or commercial property for a self-managed superannuation fund (subject to full T&C’s). In sum, we continue to remain close to our client base providing assistance and support as required.
What are your tips on how to present a finance proposal to someone who is not sure where to start?
The views and opinions expressed are presented for informational purposes only and are a reflection of TPT Wealth’s Senior Relationship Manager’s best judgment at the time the content was compiled.
All loans are subject to TPT Wealth’s commercial lending credit approval criteria. Terms and conditions, including fees and charges apply. Full details are available on application. TPT Wealth Limited ABN 97 009 475 629 AFSL 234630 Australian Credit Licence Number 234630. A wholly owned subsidiary of MyState Limited ABN 26 133 623 962.