Can A New Business Sponsor A Visa?
We recently invited Michel Sulzbach and Erica Carino, directors of Bravo Migration to a webinar on the topic, ‘Hiring Temporary Residents on a Visa’
Here’s what they said –
Any business could be approved to become a sponsor. The requirements to get a blanket approval are minimal. A sole trader, a partnership, a PTY LTD, a co-op, or any incorporated business that has an ABN, can seek approval to become a business sponsor and once approved, it will be valid for five years.
Government agencies can also sponsor and we had someone in the cabinet who was a sponsor that leaked during the Gillard years, and they were not advocates of this visa. The 485 visa is the descendant of the 457 visa and it was created in 1996 by the Howard government. It is a liberal government creation and a whole skilled migration programme. Labour tends to be vocal against it but when they were in power, there were never that many visas granted under this programme.
In any size and age business, we get a lot of contacts from startups saying, “I really need to sponsor people to get this funding or get this business going, but I’ve heard that startups cannot sponsor.” This is not true. There is no legal requirement that a business must have been trading and operating for a minimum amount of time to be approved. The business needs to be trading, but we have secured approvals even for businesses that technically were not.
One of our large clients is a restaurant and they are very prominent here in Sydney, but now they’re in Brisbane as well. When they started, they needed a chef to be there on the first day when they opened their doors and that chef needed to have work rights on that day, so we had to approve the business even before they opened their doors. We show things like they had rented the premises and they were refurbishing the premises. They had bought equipment and entered into employment contracts. Literally, the day after someone register a business, depending on the case and on the business plan, we could secure an approval for that business.
Watch the full webinar, ‘Hiring Temporary Residents on a Visa’ at https://learning.benwalker.com/courses/hiretempvisas
How To Pull Money Out Of A Company
The first way to pull money out of a company is to pay yourself a salary. It is the context in terms of pulling money out. So, how do you put food on the table through a profit you generate in your company or trust?
There are two things to keep in mind with paying a salary. We’ve moved to single touch payroll over the last couple of years as a requirement for businesses. Once you set your salary, it is kind of locked in and if you want to change it, increase it or decrease it massively. You want this strategy set with your accountant from the start, because of that single touch payroll or what we call as STP.
In terms of salary, the things you have to consider are Pay As You Go tax withholding. There’s a couple of different Pay-As-You-Gos. The W or withholding is the tax that you have to take out of your gross salary which you have to do for your own pay and you’ve got to do that for your team’s pay as well if you’ve got employees and you pay that to the ATO on your BAS. If you take money out through a salary, you have to do the same thing for yourself. And then you also have to pay superannuation on your salary as well.
Need to speak to an accountant? Book a ZERO cost 20 minute strategy call with an Inspire Accountant.
Should You Apply To Multiple Banks For Funding?
We recently invited Scott McGregor, Commercial Broker at Mortar Finance to a webinar on the topic, ‘Funding Your Next Business Acquisition.’
Here’s what he said –
We have conversations with a number of banks to understand their appetites, but generally once we work out each different banks’ appetite, their viewpoint to a transaction, potential structures that they may want to put in place and understand exactly where each bank’s position is, then we have a conversation with our customer to go through those different structures and interest rates, security positions, and all things that are important.
Work out where our preferred option is and then we would apply to that particular bank. Having an application with three or four banks isn’t always the best way to go. It is about understanding which banks can deliver on what sort of criteria, and working at the most appropriate to put an application into. When we apply to a bank they will often do a credit check and the more credit checks you have on your profile within a short range of time can impact your ability to get finance.
It is important for us to understand what our clients are looking to achieve, what banks can help satisfy that requirement and picking the best one but that doesn’t mean bank will come back with an approval, that might mean we have to look at another option, but we do as much research as we can upfront to make sure that when we put in applications on that bank and we figure we have got a better than good chance of getting that loan application approved.
Watch the full webinar, ‘Funding Your Next Business Acquisition’ at https://learning.benwalker.com/courses/fundingbusinessacquisition
Why Growth Is The Most Vulnerable Stage
We recently invited Joanna Oakey, Director of Aspect Legal to a webinar on the topic, ‘The Legal Challenges of a Growing Business’
Here’s what she said –
Why is growth the most vulnerable stage?
Growth is the most vulnerable phase for a business and many people think that the most vulnerable phase of a business is in startup, but that is a vulnerable phase generally in relation to working out whether or not the business has legs. The vulnerability in growth comes from the fact that you have something that you don’t want to lose and that has value that you need to ensure that you’re protecting. It is so devastating when we see businesses in growth suffer issues that either take their eye off the ball or entirely blow them up.
So, what are the characteristics that we see of growing businesses?
Quite often, they have a lack of structure and appropriate legal foundations. This is often because when the businesses start up and they are in the startup phase, the legal documents have come into place often from being borrowed or stolen. When you are in this period of growth and you are building yourself and your business up to withstand periods of growth, and the bigger entity that you are growing it into, it’s in a completely different situation when you set it up and put those documents in place in the beginning.
The other characteristic of growth is that fires start appearing in the business that leach time, attention and money. So at best, this can cause ongoing disputes and issues that start off as little niggles but then can grow into big niggles that take you off-course of growth and can create an unsaleable business.
We see a lot of those unsaleable businesses when the business owners have gotten weary of all of the issues that have happened in their business as part of growth and they just want to offload it. But that is the worst time to try and offload your business because it is almost unsalable at that point, and you will get a very low sale value. But at worst, it can destroy the whole business.
Watch the full webinar, ‘The Legal Challenges of a Growing Business’ at https://learning.benwalker.com/courses/legalbusinessgrowth
Will Banks Loan 100% Of The Purchase Price?
We recently invited Scott McGregor, Commercial Broker at Mortar Finance to a webinar and we asked the question, “Will the banks loan 100% of the purchase price? Or do they still look for that particular?”
Here’s what he said –
In general, a bank won’t go to 100%. However, if you had security outside of that, a residential property that was free of any debt and you put that property in as a security, then the bank would entertain that transaction up to 100%.
If it was just buying a business with security over the business and a director’s guarantee without any sort of other property or security behind it, it would be very hard to get a hundred percent finance for a business, even a residential property, bank’s going to look for a 20% deposit and that is a bricks and mortar asset. As a general rule, you will need to have some contribution there.
The other issue with funding 100% of the business is the amount of debt the business is carrying. The more debt that you are carrying in the business, the more the cashflow is going to be tested, or required to cover a loan repayment. Putting some cash in also gives you equity in that business. It also reduces the debt level and reduces the stress on a cash flow especially as a new owner, you might be sort of trading up or building up the business. 100% finance on day one can’t test the cash flow so there are a number of things to think about when we look at how much the business is going to borrow.
Watch the full webinar, ‘Funding Your Next Business Acquisition’ at https://learning.benwalker.com/courses/fundingbusinessacquisition
The 1st Thing Banks Look At When You Apply For Funding
We recently invited Scott McGregor, Commercial Broker at Mortar Finance to a webinar on the topic, ‘Funding Your Next Business Acquisition.’
Here’s what he said –
It comes down to the management experience and their skills, the industry that they are operating their business within and who are the key people in that business. I suppose when you break that down to an acquisition, if you’re buying a business that you don’t have any experience in, that’s going to be something the bank’s going to want to understand, how that’s going to work. There may be some key people within that existing business that you’re going to retain through the acquisition and it’s important to understand who those people are.
If the business you’re buying is very reliant on the previous owner, or a sales manager, if you can’t secure their services in the acquisition process, then it may have an impact on how that business is going to trade going forward. The all up understanding of the character and the ability of the applicants to buy and operate that business is going to be fundamental to the bank getting comfortable with you as an applicant for finance.
Some of the things that people do there are conditions within a contract that the previous owner will stay on for 12 months or something to help with training and upscaling to get into that business and help with the transition process. Sometimes under franchise arrangements, the franchise group will provide ongoing training and support to the new business owners to help them get comfortable with what that business is going to run once that franchise person steps away.
Watch the full webinar, ‘Funding Your Next Business Acquisition’ at https://learning.benwalker.com/courses/fundingbusinessacquisition
The #1 Issue With Structure & Asset Protection
We recently invited Joanna Oakey, Director of Aspect Legal to a webinar on the topic, ‘The Legal Challenges of a Growing Business’
Here’s what she said –
The number one common issue isn’t necessarily the one that I see most often, but it is the one that I see when it comes in and can have the most massive impacts, and that’s personal liability. Personal liability, either through your role as a director or through personal guarantees that you have given as a director. It can be a real trap and many businesses aren’t aware of the fact that when some of your suppliers ask you to sign personal guarantees, you don’t have to sign them necessarily.
Often, personal guarantees will come up in leases, in copier arrangements, and in lots of different areas. But the problem is by signing personal guarantees, you are linking that liability to you personally, through the business. You are sort of breaking that corporate veil that protects you. So be very careful about signing personal guarantees and there is always another way, and we almost always find alternative ways for our clients, other than personal guarantees. Finance is something completely different, and there may or may not be alternatives for that. But we are talking about the commercial agreements that you might be entering into.
We had this period of time through the first lockdowns last year, where we had some of the protection of some changes that had come into place temporarily to protect directors, who may have had this risk of insolvency in the business but they are gone now and we don’t have those protections in place anymore. Over the last few years, we’ve had a few clients, who’ve been in this situation, and it’s horrendous when clients, business owners, and directors are threatened with insolvent trading personal liability. It is a very emotional process so you just have to be super careful about that. And that is where a constant relationship with your accountant and insight into financials are very important.
Watch the full webinar, ‘The Legal Challenges of a Growing Business’ at https://learning.benwalker.com/courses/legalbusinessgrowth
What Do Banks Think About Vendor Finance Agreements?
We recently invited Scott McGregor, Commercial Broker at Mortar Finance to a webinar on the topic, ‘Funding Your Next Business Acquisition.’
Here’s what he said –
We see a lot of business acquisitions where the vendor was quite happy to provide some finance to the buyer on that business. It is accepted by the banks, but it is probably lower on their appetite scale than having genuine cash or property equity into the transaction. But, as long as the bank can understand the vendor finance agreement, have that provided to them and potentially have their lawyers read through it to understand how it may impact on the bank debt, some vendors will want security over the business. So if the vendor’s got security over the business, the bank will want to know that they can have a preferential security position over that business.
The Vendor Finance Agreement may include terms around how any enforcement action from the vendor could be triggered. I have seen some vendor finance agreements whereby one missed payment under that vendor finance arrangement, can trigger enforcement action by the vendor.
If they have a general security agreement over your business and they enforce against the business, the bank really has two options, they can either pay out the vendor to stop the action, or they end up joining the action with the vendor. And that is where the bank then obviously wants to be very comfortable around that agreement before they get into that position. Because it can leave the bank with really limited options in terms of what they do, which is why it’s important for the bank to understand what that vendor finance arrangement is.
It is certainly something that is able to be done as long as all the parties can understand how it works and be comfortable with it, then it is a valid option to have some additional support or finance around the business. If you have got a repayment to the vendor and to the bank, they will want to understand that the business can still make, or afford all of those repayments and not just the payments to the bank.
Watch the full webinar, ‘Funding Your Next Business Acquisition’ at https://learning.benwalker.com/courses/fundingbusinessacquisition
The 3-Step Process In A 482 Visa
We recently invited Michel Sulzbach and Erica Carino, directors of Bravo Migration to a webinar on the topic, ‘Hiring Temporary Residents on a Visa’
Here’s what they said –
The most common visas today are starting with the 482 TSS. This is the new 457 visa which really is just the same with a different name and a little bit of tweaking in the requirements. This is a visa that takes 3 steps. A business needs to be approved as a sponsor to be able to sponsor workers in this visa. Then there is a nomination which is the approval of the position being offered to that worker in particular and a visa approval as well.
The SBS, or the Business Sponsorship Approval is a blanket approval that will be valid for five years and enable businesses to sponsor people over that period. However, every time there’s a new candidate, every business, approved or not, needs to go for step 2 and 3, specifically for that person. Now that SBS approval is also valid for the regional sponsor visa.
Regional for migration purposes is any position located outside of Sydney, Brisbane, and Melbourne metropolitan areas. Gold Coast, Cairns, Newcastle, South Australia are regional areas for migration purposes and you could benefit from that because the government wants to make things easier for regional employers. So that approval is valid for the 482 TSS visa or a regional-sponsored visa as well.
Watch the full webinar, ‘Hiring Temporary Residents on a Visa’ at https://learning.benwalker.com/courses/hiretempvisas
How Do Finance Providers Approach Pre-Purchase Structuring?
We recently invited Scott McGregor, Commercial Broker at Mortar Finance to a webinar on the topic, ‘Funding Your Next Business Acquisition.’
We asked him this question –
How Do Finance Providers Approach Pre-Purchase Structuring? For example, if the business has high cash reserves and retained earnings, declaring dividends prior to purchase, and let’s say a business has half a million of goodwill that the buyer wants to buy, but the company it’s in has a million dollars worth of retained earnings – how would banks like that approach?
Here’s what he said –
The banks always want to understand any sort of dividend strategy around a business. If there are dividends coming out of the business, and where that might be going will reduce a business’s ability to repay the debt. So if there’s a dividend strategy that 100% of profits are syphoned out of the business every year, then a bank may want to understand what that is, and they may actually covenant around not taking that much money out of the business.
If it’s a growth strategy, whereby a business might declare a dividend to then release the cash and then put it towards another business, then that would be acceptable as long as the bank understood how that was transpiring and the benefits of doing that.
It really comes down to explaining what’s happening and having the bank be comfortable with that explanation and being comfortable that there’s not going to be any future impact to an ability to service the loan or impacting on the business’s balance sheet position that may then impact on asset values. So it really comes down to an understanding exactly the purpose behind that transaction and how that’s going to impact on the future of that business.
Watch the full webinar, ‘Funding Your Next Business Acquisition’ at https://learning.benwalker.com/courses/fundingbusinessacquisition
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