Equipment Finance for Transport Business

The document discusses the equipment finance requirements of Henman Holdings Pty Ltd, a transport business looking to reduce its dependence on external subcontractors and costs. The company aims to provide trucks, trailers, and other transport equipment for rent to other transport companies, using the income from these rentals to repay the loan. The $500k loan will be used to purchase necessary equipment and lease a second depot. The owners' existing transport business and assets serve as security for the loan.

Running head: DIPLOMA IN FINANCE AND MORTGAGE BROKING
Diploma in Finance and Mortgage Broking
Name of the Student:
Name of the University:
Author’s Note:

1
DIPLOMA IN FINANCE AND MORTGAGE BROKING
Assignment 2
Part A – The Client
List of Questions to be asked to the client
There are several questions that need to be asked to the client in order to have an
understanding about what they want and what is their requirement of money from the bank.
The questions that will be asked are follows:
Question 1: What is the present age and yearly income of Ray and Steve?
Question 2: What are the main sources of Ray and Steve income?
Question 3: Why are Ray and Steve interested in expanding their business?
Question 4: What kinds of income do Ray and Steve expect to generate from the business?
Question 5: What is the current budget you require for initiating the business?
Question 6: What are the annual expenses of Ray and Steve?
Question 7: Could you provide details about the aims and objectives for expanding the business?
Question 8: Could you specify the requirements of invests you are current looking into?
Question 9: What is the current bank balance of Ray and Steve?
Question 10: Could you recognise the basic capital, which will be needed to support the expansion?
Question 11: Will you recognise the requirements, which you need us to perform?
Question 12: Have you been following the rules of investment that have been laid down by the Australian
government?
Question 13: Please specify your actions if the investment value diminishes in next 40 years?
Question 14: Could you please identify the current needs of undertaking into new investment for the
business?
Question 15: What is the primary income source of the business?
Question 16: Are you more inclined towards short-term gains or long-term returns?
Question 17: Does short-term risk hamper the construction of the portfolio of the business?
Question 18: Could you please specify the actions taken during a loss from investment?
Question 19: Identify the investment strategy, which is being deployed by you during the decision making

2
DIPLOMA IN FINANCE AND MORTGAGE BROKING
process to reduce risk?
Question 20: How effectively do you understand the requirements of investment market?
Question 21: Could you explain any previous decisions related to investment and its impact on return?
Question 22: Could you recognize the appeasement priority level of Steve and Ray?
Question 24: Could you please explain the criterion for achieving success?
Question 25: Could you provide details about the process of borrowing undertaken by Steve and Ray for
expanding the business?
Question 26: Could you please explain investment pattern of your business?
Question 27: Have you identified any risk, which might take place after expanding the business?
Question 28: Could you explain current financial status of the business?
Question 29: What are the other investments that Steve and Ray might take place in future?
Question 30: Could you specify the requirements True Blue Pty consider before investing into specific
property?
Question 31: Could you address the qualification and qualities Steve and Ray demand from the consultant?
Question 32: Could you please address the geographical limitations of the business?
Question 33: Could you please highlight the entire geographical benefits for the business?
Question 34: Specify the function, which might be undertaken by us, along with financially assisting the
business?
Question 35: Will you be able to maintain the explained level of income until the period of loan?
Question 36: Could you explain your risk tolerance?
Question 37: Could you explain the current disposable income?
Question 38: Have you looked at undertaking investments in equity or other kinds of investments?
Question 39: Have you taken loan from any other financial companies for the same property?
Question 40: Have you advanced any other financial companies for loan? If yes, what was the offer and
why did it not work out?
Question 41: Do you have any idea about the financial products provided by us?
Question 42: Will the business be looking to transform the present investment scenario if better opportunity
is given?

3
DIPLOMA IN FINANCE AND MORTGAGE BROKING
Report
This report is provided to the client in order to have an understanding of the entire
scenario of the client, their requirement of taking a loan and the amount of money that will be
needed in order to expand their business and increase their level of income.
The parties that are associated with the undertaking of the loan are Ray Henley and
Steve Manning who are currently owners of a transport organization and have been
performing effectively in the Australian market. The owners are in the idea of expanding
their business by opening a new company that would providing rent of trailers and other
equipments to the existing transport company of Steve and Ray and thereby improve their
business activities and increase their level of income. This would reduce their expenses and
dependency on external suppliers. The other party to the loan is the lender who would be
providing loan to the client. There are several lenders that are available to the client and
therefore the client needs to understand the correct lender for them according to their goals
and objectives.
Security
The transport business has been functioning in the economy for around 34 months and
has effective level of operations and profit. The business has effective level of financial
statements that have budgeted income and estimated sales constructed in an effective manner.
In order to take the loan for the purpose of the expansion of their business, the owners of the
business needs to maintain their existing business premises and the business as a whole as a
security. This land for the business and the projected income of the business is a suitable
security for taking the loan and providing this security will be accepted by the lenders.
Facility Details

4
DIPLOMA IN FINANCE AND MORTGAGE BROKING
Steve and Ray have the intention of expanding their business and have therefore
founded a new business altogether that would be concerned with providing rent to the
transport company like renting of trailers, dog trailers and other equipment to transport
company would not only expand their business but would reduce their level of dependency
on the external suppliers and hence would reduce their cost and increase their level of
income. Steve and Ray are looking to take a loan in order to purchase the equipment that is
essential for the business. In order to facilitate the business, Steve and Ray have leased a land
where they would be establishing their business and would be running their company. The
rent of the leased land is $6000 per month. This is the facility details for the new business
that is proposed by Steve and Ray.
Lender Details
There are several lenders that are available to Steve and Ray in order to take a loan for
the purpose of taking a land for establishing their new business and equipment for the
purpose of starting the business. The lender’s that are available are as follows:
Loan Providers Commercial equipment finance
ANZ  Rate of interest at 7.00%
 No Application Fees
 No Annual Fees
 5 to 30 years minimum term loan
 $10,000 to $100,000,000 loan amount provided
 LVR 80%
SUNCORP Bank  Interest rate at 4.30%
 No Application Fees
 No Annual Fees
 5 to 15 years minimum term loan
 $10,000 to $1,000,000 loan amount provided
 LVR 60%

5
DIPLOMA IN FINANCE AND MORTGAGE BROKING
BOQ  Interest rate 5.00%
 No Application Fees
 No Annual Fees
 5 to 15 years minimum term loan
 $200,000 to $100,000,000 loan amount provided
 LVR 65%
Commercial Bank  Interest rate 7.80%
 No Application Fees
 No Annual Fees
 Maximum 15 years term loan provided
 $25,000 to $100,000,000 loan amount provided
 LVR 85%
Client’s Complex Requirement
The requirement Steve and Ray have is to commercially finance for the equipment
that is required to start the business and accordingly expand their business. Steve and Ray
want a loan that would provide minimum level of risk and the rate of interest that would be
ideal for them. In order to have room for the new agreements, it is essential to plan for an
expansion for the future and therefore require a finance of 500k. They have established a new
entity in the name of Henman Holdings Pty Ltd. The equipment would hire internally and the
charges for the rent would be used to finance for the payments. They are in need a depot and
for that they have to pay a rent as well. The purchase of the equipment would be used for the
purpose of additional flexibility and capacity in order to mitigate the dependency on the sub-
contractors. This can expand their business along with increase revenue for both the business
as well.
Personnel

6
DIPLOMA IN FINANCE AND MORTGAGE BROKING
The client is in need of an accountant and solicitor in order to assist them in paying
for the loan and structuring the finance in an effective manner in order to perform the
business effectively. There is a need for a solicitor in order to prepare for any kind of new
contracts and agreements that would be undertaken with the lenders and other associated
parties. This will safeguard the interests of Ray and Steve and their company as well.
Process timing
The loan needs to taken at an effective time in order to establish the business and
therefore the loan needs to be taken within six months. The client needs to arrange for the
proper application for getting approval for the loan. The documents that are essential in order
to get the loan approved needs to be arranged and thereafter the loan process can be operate
smoothly. All the documents like the financial statement of the company, the projected sales
and the various documents for the approval of the loan needs to be submitted to the lender so
that they can assess the documents and approve the loan and initiate their business.
The contract will be purchased by the name of Henman Holdings Pty Ltd and the
client needs to pay a fee and charge for the purpose of taking advice. A fee of 2% on the
overall loan amount will be charged as an advice and conveyance cost and other fees have to
be paid in order to complete the entire loan process. The entire broking process have been
explained to the client verbally with the help of face to face interview and even provide a
manual guide that would explain the complex broking process.

7
DIPLOMA IN FINANCE AND MORTGAGE BROKING
Part B
This report has been prepared in order to provide the information regarding the client
to the lender.
Details of the Borrower
Name Ray Henley Steve Manning
Salutation Mr Henly Mrs Manning
Age NA NA
Marital status Married Single
Home address NA NA
Health Good Good
Smoker No No
Occupation Business Business Partner
Projected retirement age Not thought about it Not thought about it
Steve and Ray have been associated with the transport business for several years and
each one of them has been Financial Controllers for renowned transport organizations. Ray is
a MBA and Steve on the other hand has a degree on marketing. Ray is married and has no
dependent and Steve is single and currently completing a HR degree as he feels that this
degree would be helpful in the development of the existing business.

8
DIPLOMA IN FINANCE AND MORTGAGE BROKING
Background
Steve and Ray are partners to a transport business and their company has been
running successfully. With the development of the business, new contracts have been coming
in and therefore the owners have decided to expand their business. They have the idea of
starting a new business named as Henman Holding Pty Ltd and this company would be
providing trucks, trailers and other equipments to the transport company internally with the
help of which the current business can reduce their level of dependency on external sub-
contractors and reduce their costs as well. The business that would be initiated would pay for
the loan with the help of rent they would receive from the income from the rent of the trucks
and other equipment. The business is need of a loan of $ 500k.
Purpose of the loan
The main purpose of the loan is to start a new business named as Henman Holding
Pty Ltd that would provide trucks, trailers and other transport equipments as rent to the other
transport companies and accordingly generate income that would be used in order to pay for
the loan. The loan would be used in order to purchase the trucks and the trailers that would be
used for giving out the rent and even paying for the land that will be used for the second
depot for the company.
Facility Details
The facility that is demand are the trucks and the dog trailers along with the other
transport equipment that would be used for the purpose of giving rent to the other transport
companies especially their current business in order to reduce their expenses. Loan will even
be required in order to pay for the depot that would be leased and other associated costs for
sounding the business.

9
DIPLOMA IN FINANCE AND MORTGAGE BROKING
Funds Position
The position of the fund is the actual factor because of which the company wants to
take a loan. It is seen that Henman Holdings Pty Ltd require an equipment finance of $500k
and the company needs a loan of complete $500k and the other related expenses will be paid
by them. The owners currently have adequate level of income from their present transport
business and in order to plan for the new contracts, the expansion is required.
Servicing Capacity
The servicing capacity is as follows:
Security
The security the owners can provide is their existing transport business along with the
assets that are associated with the business. The overall value is equivalent to the loan amount
the owners want to take.
Risk Assessment

10
DIPLOMA IN FINANCE AND MORTGAGE BROKING
The risk assessment of Steve and Ray has revealed that the couple liquidity and
inflation risk associated with their business. Liquidity risk is due to the business transactions
that are taken in the business and inflation risk is due to the changes in the economy. Market
risk is even seen which can lower the annual income and obstruct the organization from
paying their annual instalment repayment.
Recommendations
Steve and Ray can be suggested to assess the market from time to time and
accordingly change their plans and actions that can reduce their level of risk and improve
their operational activities. The business can even safeguard the money by purchasing
insurance for the company in order to secure their income and earnings.
Attachment
The attachment provides the documents that have been submitted and which would be
helpful in understanding the current financial scenario and accordingly loan repayment ability
for Steve and Ray.

11
DIPLOMA IN FINANCE AND MORTGAGE BROKING
Bibliography
Abbasi, M. R., Esmailpour, H., & Heidari, H. (2016). A survey of the factors of relationship
continuance with suppliers of industrial equipment of Gas Refinery Company in
Ilam. Procedia Economics and Finance, 36, 480-489.
Gupta, M. D., & Basak, R. (2016). Commercial Banks Finance and Economic Empowerment
in Women-Owned Micro and Small Enterprises in India-A Study on Engineering
Sector of Howrah, West Bengal. Journal of Entrepreneurship and Management, 5(2).
Lei, L., Zhou, Y., & Xiao, Y. (2017). Application of the Analytic Hierarchy Process to
Identify the Most Suitable Lessor of Freight Car Finance Leasing. In MATEC Web of
Conferences(Vol. 124, p. 02005). EDP Sciences.
Moustaira, E. N. (2017). The Greek Law on Security Interests Burdening Transport Vehicles
as Compared with the Cape Town Convention. In Implementing the Cape Town
Convention and the Domestic Laws on Secured Transactions (pp. 243-252). Springer,
Cham.