Haven Winter 2017

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Small business lending is set for a shake-up that will make terms fairer for the little guys if recommendations by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) are introduced.

The Carnell Report, released in February following an inquiry into bank lending for small-to-medium enterprises, has made 15 recommendations designed to address regulatory gaps and shortfalls in lending practices that disadvantage business borrowers.

Bank loans remain the most readily available source of funding for businesses, so are often the first port of call. They come with a repayment plan attached to an interest rate, with lenders requiring some form of collateral, which they can confiscate and sell if payments are not made on time.

The problem, according to the Carnell Report, is that rules have traditionally been stacked in favour of lenders. While the report conceded many defaults on commercial loans were a result of poor business decisions, it found operators were also often unfairly hampered by one-sided contracts that allowed lenders to move the goal posts with no, or minimal, recourse for customers.

The report found small businesses were vulnerable when faced with:

  • Insufficient timeframes around key loan milestones.
  • Misleading and conflicting information between bank sales staff and credit risk staff.
  • A lack of transparency and potential conflict of interest around dealings with third parties, such as valuers, investigative accountants and receivers.
  • No recourse other than the court system, which led to borrowers with few resources taking on banks with deep coffers and considerable legal clout.
  • To address the imbalance, the inquiry recommended longer notice periods of changes to loan terms and clearer, more concise explanations of clauses and covenants.

Perhaps the most significant recommendation is for a new external dispute resolution (EDR) service for small business borrowers. The Federal Government has agreed to set up a one-stop-shop for consumer complaints to provide faster access to justice, make binding determinations and provide compensation.

Finding finance
Regardless of which way you turn, you should have a sound business plan to demonstrate revenue and, importantly, cash flow. If already in business, your previous three years’ financials will also be helpful. The more the funder knows about your business, the more likely they are to say “yes”.

Grants
It’s hard to go past free money, with various private sector and government grants up for grabs. Applications often take time and require significant information, but the windfall can be worth it.

Keep in mind competition is fierce, so be prepared to go the extra mile to promote your enterprise’s vision and worth.

Use the Federal Government Grant Finder to locate funds for a range of initiatives – from start-ups to exports and research and development – across various industries, including digital technology, agribusiness, science and many more.

Many companies and individuals also offer a leg-up for small businesses. The Business Aid Centre is a good starting point with helpful hints and listings by industry and grant dates.

Talk to your broker
Many mortgage brokers are leveraging their relationships with residential mortgage lenders to offer commercial finance. The benefit of borrowing through your broker is they know your financial situation and can explore your most suitable options.

The right finance can help you fuel growth and help build a strong and successful business. Get it wrong and the debt can often have the opposite effect. In business, the right finance is so much more than just finding the lowest interest rate and reducing fees. Not only do you need the right type of finance, you need to be able to choose from the widest range of options and the right structure. Needless to say, there are a lot of complexities. It can be a difficult area to navigate, and to have the confidence to know you’ve made the right choice.

With help from your broker you have the peace of mind knowing your business has the right funding in place, and leaving you to get on with doing what you do best – growing your business.

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“The more that you read, the more things you will know. The more that you learn, the more places you’ll go.”

Dr. Seuss would wholeheartedly approve of Street Library – it is right up his whimsical alley. Sprouting up in front yards and on garden fences and verges across Australia, a Street Library is a little home for books to be borrowed and shared. They are accessible from the street and an open invitation to share the joy of books with neighbours.

A registered not-for-profit charity, Street Library has a simple purpose: to encourage literacy while bringing neighbourhoods closer together. The books come and go – no one needs to check them in or out. Reach in and take what interests you, and when you’re done, return it to the network to pass on the love. If you have a book you think others would like, pop it into any Street Library you see. In our throwaway society, a cycle of generosity is created with participants encouraging reading, sharing and a sense of community.

The movement originated in the US and was launched in Australia by Nic Lowe in 2015. Nic’s aim was to see 500 Street Libraries planted across Australia. You can build your own at workshops run across the country, by downloading DIY instructions from the project’s website, or you can purchase a ready-built box made by a local Men’s Shed from the Street Library Australia website.

Discover if there’s a Street Library near you or become a part of the movement yourself by visiting www.streetlibrary.org.au

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If you have seen the movie Money Pit, in which Tom Hanks and Shelley Long play a hapless couple whose home renovations plummet from bad to disastrous with every swing of the hammer, it’s easy to see why buyers should be beware.

But it’s not just hidden and costly repairs that can snag home owners and investors. Haven lifts the lid on other potential pitfalls.

Title check
It’s worth enlisting a professional conveyancer to undertake a title search when buying a property. The title search will reveal any easements (shared access) or covenants (restrictions). Easements could include the right for pipes to be buried on your land, while covenants can specify building materials or restrict building height. Easements and covenants are not necessarily dealbreakers, but you should be aware so you can plan around them, especially if renovating or rebuilding.

Off the plan
There are pros and cons to purchasing off the plan. While many punters have notched up solid returns in the short and long term, it remains one of the more speculative ways to buy, especially in markets with high volumes of new apartments in the pipeline.

If buying off the plan, make sure you do your homework on the local market and have sufficient financial back-up to withstand any dip in value on your purchase price once built and any short-comings in the projected rental return.

Weather resistant
Avoid being a fair-weather buyer who collects the keys having only seen the property on sunshiny days. Rain can quickly transform a poorly-drained property from bliss to bog. If you don’t get to inspect the property in wet weather, be bold and ask neighbours how the property holds up in a downpour. You should also always check council flood maps to see if the property is at risk of flash, creek or river flooding. Some councils do a better job than others of collecting and sharing flood data. If council flood maps are not publicly available, a council planner might be able to give you historical information about your property.

A professional building inspection can also help detect any drainage issues.

Know your neighbours
It’s hard to know who lives over the fence or down the hall until you move in, but bad neighbours (at the risk of another movie reference) can make or break your dream home.

At the risk of snooping before you move in, try and get a read on who else lives in the street or complex. If flanked by households of renting students, you could be in for some late-night parties, which may be tolerable if a midnight party-goer yourself, but less welcome if you have a young family.

Close inspection
Be sure to invest during the cooling off period in a pre-purchase pest and building inspection by a licensed and insured professional.

Professional inspections can unearth evidence of pests – including termites and rodents – and structural issues such as dry rot, rising damp, roof leaks, asbestos and poor drainage.

There is no cooling off period at auctions, so book an inspection and read the report well ahead of auction day.

Body corporates
If buying an apartment, villa or townhouse, do your homework on the body corporate – the fees for each quarter and how the body corporate operates. A well-run body corporate can help avoid surprise costs for unforeseen repairs and prevent disputes over common areas.

Check there is an adequate sinking fund to cover repairs and refurbishments and sufficient strata insurance to cover total replacement of the apartment building or complex in the event of a catastrophic fire or natural disaster.

You should also request copies of at least the previous three body corporate meetings to get a read on any potential issues.

Beyond your means
Be careful not to commit beyond your finances. Interest rates are at record lows and will inevitably rise again. Make sure you leave a buffer in your budget to manage any increases or change in personal circumstances, even if your lender lets you borrow more initially.

Ideally, your mortgage repayments should be no more than 25 per cent of your total household net income. Talk to your broker to assess your affordability in line with your personal circumstances.

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Whether you’re a novice or an experienced green thumb, this is a definitive guide for anyone who dreams of bringing the country life to their little piece of suburbia by growing sustainable fruit and veg in any space. Horticultural expert Justin Calverley provides practical advice on creating an urban Garden of Eden in your backyard, on a balcony or courtyard, or even the front verge.

ABC Books RRP $39.99

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Pistachio, cranberry and fig granola

Thank you to Monique from her blog The Sunday Best for sharing this scrumptious day-starter with us. “For a long time, I’ve been making my own granola (muesli) for breakfast. It’s simple to make and you’ll love the awesome smell in your kitchen as it bakes.” Monique said. Visit The Sunday Best for more delicious recipes together with musings on design, photography, art and travel.

Dry ingredients:
2½ cups rolled oats
2½ cups rice bubbles
¾ cup LSA*
¾ cup sunflower seeds
¾ cup pepitas
½ cup shredded coconut
½ cup psyllium husk
½ cup chopped macadamias
½ cup chopped pistachios
½ cup chopped pecans
¼ cup chia seeds
1½ teaspoons of ground cinnamon

Wet ingredients:
50ml coconut oil
50ml honey
Few drops of vanilla extract

½ cup of dried cranberries
¼ cup of chopped dried figs

Combine dry ingredients in a large bowl and mix well.

In a separate small bowl combine the oil, honey and vanilla. Stir this oil mixture into the dry ingredients, ensuring all the dry mix is coated.

Transfer the granola into a large, deep baking tray. Bake on a low heat at 160 degrees for 25 minutes, making sure to take it out of the oven and stir every eight minutes.

Once cooled, add the cranberries and figs.

* LSA is a linseed, sunflower seed and almond mix which comes in fine or coarsely ground form and can be bought ready-made from health food stores and supermarkets.

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With 205 billion emails being sent around the globe each day, many of us know the horror of accidentally sending the wrong email to the wrong person. In our last edition of Haven, we asked for your most cringeworthy story of an email fail. Congratulations to Charlotte on her winning answer.

I was working in HR of a government agency and had received an email from a colleague in Finance arguing back to me about an HR policy I had been trying to portray to him. His long-winded answer was sooo boring that I flicked it on to one of my HR colleagues with the comment: “Blah, blah, blah.” I then realised to my horror, that I had hit reply rather than forward! I tried to retract the email several times, then had to call the Finance guy to explain how sorry I was. Luckily he lived in Canberra and I was in Sydney, because he was 180 kilos worth of a man and would have squashed me with his little finger!

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June 30 signals the end of another financial year. There’s still a little time to get this year’s finances in order or take the opportunity to make some resolutions about how you manage your money from July 1.

Here are Haven’s top tips for a more fiscally fabulous financial year.

MANAGE YOUR MORTGAGE
It’s easy to put your home or investment loan on the mental back burner, especially with interest rates so low. But complacency could be costing you thousands over the life of your loan. It costs nothing to talk to your broker to see what other lenders are offering or if you can slice the interest rate with your current lender.

SOCK AWAY EXTRA SAVINGS
Make a point of hoarding any extra cash throughout the year. Turn tax returns, pay increases and work bonuses into savings, not spending. Inject these and other windfalls into your mortgage to reduce the cost and life of your loan. If you have a redraw facility you can always pull the cash back out if a need arises.

DOUBLE DOWN ON CLEARING DEBT
Pay down your most expensive debts first, then take care of the rest. If only making the minimum repayments on credit and store cards, you will be carrying debt for a lot longer than needed and making it harder to get ahead. Review your debts and make a point of paying off those attracting the highest interest rates first. You should also consider transferring high-interest credit card debt to a low interest option. Keep an eye out for zero-interest transfer offers and make the most of the opportunity to clear your balance sooner.

GET SAVVY WITH YOUR SUPER
Your annual super statement will land in the new financial year. Take the time to read it and see how your nest egg faired. Employers must contribute a minimum of 9.5 per cent of your salary to your super, and some offer more. You can also salary sacrifice contributions to top up your investment. How much depends on your stage of life and personal finances.

Talk to your financial adviser to check how much extra you can contribute without being penalised and whether making extra contributions is the best option for your financial circumstances. From July 1 concessional (before tax) contributions will be capped at $25,000 per year for all ages.

You should also check your investment mix and adjust it if not happy with its performance. Your super fund should offer a choice of investments based on risk. The higher the yield opportunity, the higher the risk. How you spread your super across various investments, such as shares and cash, is up to you.

If receiving more than one super statement, consider bundling your accounts into one. Super builds on compound interest, so you may be short-changing yourself if your accounts are dispersed.

CASH IN ON TAX DEDUCTIONS
You still have time to make any tax deductable purchases before June 30. Check with the ATO what you can claim for your specific job if you are a PAYE employee.

Small business owners have until June 30 this year to cash in on the $20,000 instant asset threshold. This allows you to immediately deduct the business use portion of a depreciating asset that costs less than $20,000.

Now is also the time to make tax-deductible donations to a registered charity of your choice.

If you are cashed up, you may be able to pre-pay some tax deductable expenses, such as accountant fees, interest costs on investments and some work-related expenses, for the next financial year. Check with your financial advisor to ensure you are eligible for pre-payments and they suit your situation.

Tax: the information in this article does not constitute advice. As taxation legislation is complex we recommend you speak with your financial advisor, tax advisor or contact the ATO for further details and expert advice regarding your personal circumstances.

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Totes awks family photos

Embarrassing, awkward and hilarious family photos are a treasure that can be found in many a home. Whether hanging in pride of place on your mum’s loungeroom wall or buried away in a box of old photos, some of the best examples have the 1970s and 80s to thank. We’re on the hunt for a winning entry from your family. Drag out the photo albums and send us a classic photo from your family archives for the chance to win $1,000.

How: email your photo to havencompetitions@afgonline.com.au placing ‘Family photo’ in the subject line.

Include: your name, address, email, phone number and the name of your mortgage broker.

Dates: opens on May 19 and closes on July 13.

Winner: will be decided on July 14 and notified by telephone after this time.

Terms and conditions: email havencompetitions@afgonline.com.au to request terms and conditions.

WHAT YOU NEED TO KNOW

Any advice contained in this newsletter is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this edition is correct as of the date of publication and is subject to change.

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