The Consolidation
Terms set in 2021, never tested since.
A mature facility should be reviewed as a complete capital structure: pricing, covenants, security, cross-collateralisation, release mechanics and the capacity reserved for the next decision.
The position
What nobody has offered to do
Benchmark the facilities in writing. Identify what is captured under the GSA. Establish whether the family home still supports a facility the business has outgrown, and define what happens on the day an asset needs to be sold or released from cross-collateralisation.
Then test the building. Eleven years of rent and another review approaching creates a capital-allocation question. The comparison needs the transferred outgoings, acquisition costs, debt amortisation and opportunity cost of the deposit over a ten-year horizon.
Common assumptions
What you've been told, and why it's wrong
| Told | Why it's wrong |
|---|---|
| Your rate is competitive for a business your size | An untested assertion until the facility, security and covenants are benchmarked. |
| We need a GSA over everything | A starting position, not a fixed requirement. |
| We'll need the family home as additional security | Often a default request. Release conditions can be built in. |
| Cross-collateralising keeps it simple | Simple for the lender, but potentially expensive and restrictive for you. |
| Buying the premises will hurt your working capital | A modelling question, not a rule. |
| Buy it through your SMSF | Sometimes excellent, sometimes badly unsuitable. Structure is your accountant's question. |
Our work
What we do about it
Benchmark existing facilities in writing.
Map the actual security position, including the GSA and cross-collateralisation.
Model premises acquisition against the current lease over ten years.
Structure release conditions and covenant headroom before they become live problems.
We benchmark the position without attacking the incumbent bank or banker. A fifteen-year relationship belongs in the assessment, not outside it.
Rent vs Buy Your Premises
A ten-year cash comparison including owner outgoings, deposit opportunity cost and acquisition costs.
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