Posted: 03 December 2018
CSF Could Help Repay Mum & Dad Loans
Accountant's Minute 179
According to Kate Carnell, the Australian government's Small Business Ombudsman, more than 25% of small and medium enterprise loans are being supplied by the parents of small and medium enterprise owners.
The “Bank of Mum and Dad” is being forced to fund more than 25% of small and medium enterprise loans because of the credit crunch which is being worsened by fallout from the Banking Royal Commission, Kate Carnell was reported as saying in the “Financial Review" (Click here).
“Falling residential property prices are compelling the difficulty in borrowing because most lenders require small and medium enterprise owners/shareholders to put up their houses as collateral".
Because of their parents’ retirement plans, some of the small/medium enterprise borrowers from the “Bank of Mum and Dad” could be interested in the new opportunities for small proprietary companies to raise capital from the public, with part of the capital raised being utilised to repay their parents loans.
The basic requirements to raise up to $5 million in a 12- month period are:
- group sales under $25 million per annum
- group gross assets valued at less than $25 million
- neither the company, nor any of its associated entities, are listed on a stock exchange anywhere in the world.
More details on the processes for accountants/business advisors to assist clients/prospects who are interested in raising capital, are available on the ESS BIZTOOLS' website - Crowd Sourced Funding Equity Raising Package - Learn More.
If you require any additional information please contact us:
Have a great day!
