The term ‘Super’ here refers to one’s superannuation – the total savings one has accumulated throughout their working lives. Super can be used as a source of investment, and these investment opportunities include investments into property, banks or even to buy a business. These ‘super investments’ ultimately aim to obtain additional returns based off the amount saved. But here, the question arises of buying an existing business, to which the answer lies below:
Yes, an individual can use their superannuation funds to buy a business and gain additional returns through running business operations. Research reads that for women over the age of sixty-five years old, almost 65% of them use their super funds to invest and use the remaining funds to pursue their passions and to run the household.
Hence, it is possible for a retiree to buy a business using their super funds, whilst also enjoying what they are passionate about at the same time.
SMSF stands for the self-managed super fund. To put it into perspective, consider a common situation many business owners find themselves in. They must either choose to lease space for their business to perate in or purchase property and be the sole owners of it.
If the super funds is inadequate, getting a loan from a bank or financial organisation is possible even with low documentation.
As a guideline, using SMSF to purchase commercial space for the business should come with a cash deposit of 35-40% above the price of purchase of the commercial space. Further, a particular lease termed as market lease shall be paid on a commercial basis, if the particular space is leased from a third party.
Hence, having a SMSF in terms of running a business is more beneficial than leasing out yet another property.
Banks come into the picture when borrowing enters the stage. The banks will evaluate the credibility of the business, the sale forecasts, the business structure, forecasts, the turnover, profits and look at other detail. To draw a healthy and steady borrowing for the business, the balance sheet, cash flow statements, profit and loss statements, and the individual’s documents stating prior experience of running a business, must also be presented to the banker.
Only after the banks approve that the documents provided by the business and proprietor is sound do they proceed in distributing the loan. As a general rule of thumb, sixty percent of the value of the business is the maximum that banks are willing to disburse. For additional borrowing, private finance organisations can provide extra funding, but could come with higher rates of interests.
Mortgaging one’s commercial or residential properties can also be a part of borrowing if the above two options still do not provide sufficient funds.
Unsecured loans, are another alternative that has only recently been introduced in Australia. Generally it provides funding at a higher rate of interest than the banks.
The Australian economy provides a special business visa to nationals who do not belong to the country but are willing to do trade and business within the continent.
A sectoral research shows that the following sectors can be profitable enough for investment in the country:
Several other options may include event planning, digital media houses, and livestock farming.
If none of the above options are suitable for you, you can always apply for a start up business loans from MaxFunding. We provide easy eligible business loans for you to start your own business. Apply now and get decision in 5 minutes.
Tammy Richards is a seasoned finance writer with over 15 years of experience in the industry. With a keen eye for detail and a passion for helping people make smart money decisions, Tammy has become a trusted voice in the world of personal finance. Holding an MBA and drawing from her extensive entrepreneurial background, she offers valuable insights and practical advice to her readers.
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