Empower Your Business Loan Repayment with a Strategic Cash Flow Tool 

Unlock the potential to swiftly pay off your business loan by leveraging the benefits of a business offset account. This powerful financial management tool not only offsets loan interest but also provides easy access to funds, preventing your cash flow from being tied up unnecessarily. 

Setting Up the Offset Account: Tailoring to Your Business Needs 

• Incorporating into Commercial Property Loans: 

For business owners acquiring commercial premises, integrating an offset account into their commercial property loan becomes a strategic choice. Funds in the offset account directly offset the interest on the property loan. 

• Stand-Alone Business Loans: 

Even with stand-alone business loans for start-ups or working capital, an offset account is accessible. However, securing it may require equity in a residential property. 

Qualification Criteria: Exploring the Offset Landscape 

• Widespread Availability: 

Most banks and lenders offer offset accounts as part of their business loan facilities, providing flexibility in choosing basic packages or more comprehensive professional packages. 

• Fee Structure Overview: 

1. Annual or monthly account-keeping fees vary among lenders, with potential waivers based on monthly deposit amounts. 

2. Transaction fees differ, some lenders offering fee-free transactions. 

3. Minimum offset balance typically starts at $5,000. 

4. Minimum withdrawal amount is set around $1,000. 

Note: The specifics may vary; this serves as a general guide. 

Benefits for Your Business: A Financial Game-Changer 

• Cost Savings Illustration: 

Example: With a $200,000 business loan at 9.00% interest over 10 years, maintaining $20,000 in the offset account can lead to savings of nearly $87 per month or $1,044 annually. 

• Outperforming Savings Accounts: 

Comparing a savings account with 2.7% interest to a business loan charging 8.00% interest, depositing funds in the offset proves financially superior. It not only saves on interest payments but offers tax-free benefits. 

• Tax-Free Advantage: 

Unlike interest earned in a savings account, the offset’s benefits are tax-free. Additionally, the flexibility to access cash flow sets it apart from tying up funds in long-term savings like term deposits. 

• Versatility in Fund Access: 

Enjoy seamless access to funds through ATMs, EFTPOS, chequebooks, and online banking. Some lenders extend this convenience by linking the offset account to an overdraft facility. 

Considerations: Offset vs. Extra Repayments 

• Assessing Cost-Effectiveness: 

Weigh the cost of maintaining an offset account against its utility for your business. Regular use for cash flow may lead to minimal interest offset, prompting consideration of direct repayments. 

• Quick Access Advantage: 

The offset’s swift and easy fund access distinguishes it from redraw facilities. In the realm of business where rapid access to cash flow is vital, an offset often proves more advantageous. 

• Strategic Financial Management: 

Consult with your mortgage broker and seek advice from your accountant to determine the most effective approach in managing your business finances. While offset accounts are beneficial for everyday transactions, redraw facilities are best reserved for emergencies. 

Conclusion: Empowering Business Financial Management 

In the dynamic landscape of business finance, an offset account emerges as a potent ally, offering businesses a smart strategy to optimize cash flow and expedite loan repayment. By carefully navigating the nuances and aligning with your business goals, the offset account can prove to be a valuable asset in your financial toolkit.