Frequently Asked Questions

Answers to some of the most frequently asked questions regarding asset based lending.

Don’t hesitate to call us on (07) 3368 9980 if you have questions that are not answered here.

No. You can keep your current banking arrangements in place. The only change will be the banking details you provide on the bottom of your invoices you send out to your customers. These details will be a VUE bank account to which your customers will pay into.They will not be aware that it is a VUE bank account.

No. VUE will be only providing bookkeeping services as a condition of the funding facility. Your current accountant can still look after all your taxation returns.

No. VUE registers an ALL PAAP over the business on the Personal Property Securities Register (PPSR). Prior to the PPSR this type of security was known as a Fixed and Floating Charge. Essentially, we take a mortgage over your business NOT your personal property.

There are several important differences:

  • Traditional term loans provide one lump sum of cash when the loan is issued, and the rest of the loan term is spent paying off the principal and interest. With asset based loans, different amounts of money can be regularly borrowed and paid back repeatedly over the life of the loan arrangement.
  • Term loans usually have a set amount that must be paid back each month, for a set number of months. With an asset based loan, the payments can vary depending on how much money the business collects from sales or receivable payments.
  • In setting up a traditional loan, the bank looks primarily at cash flow and credit ratings to determine whether a business qualifies for a loan, or how much money they can borrow. With an asset based loan, VUE looks primarily at the value of the business’s assets, and factors such as credit scores are not weighted as heavily.

There are two primary differences between asset based loans and factoring.

  • Factoring deals only with receivables, while asset based loans can be based on both receivables and physical assets.
  • Factoring involves the transfer of ownership. Your invoices are sold to the factoring company, which then owns the receivables and collects the money from your customers. With a loan, you retain ownership of the receivables and any other assets that are used as collateral.
  • Initial upfront fee of $1,500 to conduct the initial review,
  • Legal costs for loan document preparation of generally $1,500 – $2,500 depending on the business structure, and
  • Independent valuation fees on business assets which is dependent on the location and number of items to be valued.
Asset Balance Sheet Eligible Amount Advance Rate Maximum Advance
Accounts Receivable (Debtors) $   100,000 $ 80,000 85% $   68,000
Inventory $     50,000 $ 40,000 50% $   20,000
Plant & Equipment (Equity) $   100,000 $ 80,000 60% $   48,000
TOTAL LIMIT $ 200,000 $ 136,000

The following table is a guide for the Line of Credit. The management fee %, calculated on your sales, includes all financial recording and reports, line of credit funding and IT support costs.

For additional short-term advances, that may be required from time to time based on inventory and fixed asset LVR’s, interest is calculated at 1.5% per month of the outstanding advance balance and applied to the RLOC. Principal reductions for advances are made from deductions from the monthly retention balance from the Line of Credit.

ANNUAL TURNOVER $0 to $1,000,000 $1,000,001 to $1,500,000 $1,500,001 to $2,500,000 $2,500,001 to $3,500,000 $3,500,001 to $5,000,000
FACILITY FEE (Excl GST) 7.00% 6.00% 5.00% 4.50% 4.00%
Usually, it takes 5-10 business days between the day that you apply for your asset based loan and the time that the first funds are issued. Once the loan arrangement is established, further cash advances can be funded on your invoicing days.

Yes. An asset based loan arrangement is, in many ways, a partnership; both the business and VUE will benefit most if the loan is structured in away that gives you the best chance of success with the lowest risk. Treat your loan as a partnership, and work with VUE to find the best mutually beneficial solution.

A bank account (called a segmented account) is set up to receive the payment of your customer invoices. Any amount that is paid off frees up room within the credit limit, allowing you to borrow more money if needed. This way, you have a great deal of control over exactly how much you have borrowed and how quickly it is paid off.

Because asset based loans are so customizable, it is difficult to specify the exact minimum conditions that would be required to qualify for a loan. However, in saying that, an absolute minimum your business will need, is to trade on a business-to-business basis offering terms to your customers -i.e., it must have a debtors or accounts receivable balance.

Still need answers? Call us on (07) 3368 9980 and we will happily help you.