A business financier for financial professionals has announced that it has launched a new, multi-redraw facility product for brokers and planners.
Book Buyers Brokerage Australasia Finance (BBBSA) has rolled out a new multi-redraw facility (MRF) that enables business clients, such as brokers or planners with a trail book or recurring income, to procure a loan to fund their businesses’ ongoing cash flow needs.
The fixed rate, fixed-term facility allows borrowers to repeatedly go back for top-ups and “continually maximise the entire facility”.
The product was designed for brokers or planners whose trail book (or recurring income) is stable or growing.
Speaking about the MRF to The Adviser, BBBSA managing director Jeff Zulman said that the roll out of the new product was part of BBSA’s “continued commitment to providing [its] clients with the most streamlined and intuitive financial service in the industry”.
He elaborated that the new product had come about after BBBSA clients had asked the lender how they could draw down money multiple times without using their credit card and paying the associated rates.
Mr Zulman said: “This product has been designed to substantially undercut what you would pay on a credit card. While the rates would vary, as a benchmark, it would be more in the remit of an unsecured overdraft rate as opposed to a credit card rate.”
“So, brokers would be able to borrow money, pay it back, and then, if they need to borrow that money again, be able to redraw it. We'll just recalibrate the payments but the underlying rate could be 40 per cent cheaper than a credit card.”
The head of sales and business development at BBBSA, Robert Seton, likened the new redraw facility “to having a come-and-go facility but with the unique feature of having the certainty of fixed interest rates”.
The loan would be available on a term of between two and five years.
According to BBBSA, the product would be attractive to brokers or planners as it provides “certainty of both funding and rates”, without the need to establish new terms or vary the existing facility each time additional funds are required.
It highlighted that “normally brokers or planners qualify for a loan but find that, as they make principal repayments, the amount they can borrow shrinks, providing less and less gearing over time”.
It argued that the MRF product would translate into certainty and faster turnaround times, with funds provided within four days.
The specialist financial services lender said that the MRF would be a “game changer” for those in need of funds for “opportunistic purchases of other books or practices, or even emergency funds”.
Suitable borrowers would be those with growing, or stable trail books, rather than those whose trail books “is in runoff”.
Mr Zulman noted that products such as these would be a “real stopper” for the industry as long as the Productivity Commission’s recommendation for trail commission to be abolished does not come to fruition.
He told The Adviser: “this product would be brilliant - it will be a show stopper - provided the politicians don’t interfere and take away trail going forward. Because this is how brokers monetize what they build and ultimately how they sell it.
“The PC is saying, take away people's trail, pay them a higher upfront but don’t five them trail, because they believe it is conflicted.
“I want to know which politicians are going to pay for the retirement savings of all these mortgage brokers whose real asset is the trail book. If there is no trail book, there would be no borrowings.
“If they take trail away, these brokers can work to 120 years old, but they will never be able to get off the treadmill”
Mr Zulman will be speaking at The Adviser’s inaugural Business Accelerator Program, run in partnership with Bankwest, in September.
The hands-on workshop event will visit three cities — Brisbane on 18 September, Sydney on 20 September and Melbourne on 27 September — and is a jam-packed, deep learning program designed to equip brokers with the knowledge to increase volumes and expand their client base.
Delivered in a hands-on workshop environment, the Business Accelerator Program aims to help brokers reduce administration and increase productivity.
To secure a saving of $80 off your standard ticket, enter code ONLINE at the checkout.
Find out more about The Adviser’s Business Accelerator Program 2018.