How should my business lending be structured given that we are a family business?
The optimal lending structure for a family business depends on your long-term priorities and risk tolerance. Plenty of family businesses leverage assets held in a family trust to secure lending, which can result in more favourable terms and greater borrowing capacity. However, in some cases, the additional benefit may be marginal and not justify the exposure.
At times, preserving asset protection for the family will take precedence; at others - such as funding growth or acquisitions - offering the bank additional security may be appropriate and strategic.
Even when family trust assets are used as security, it's important to understand the circumstances under which a lender may agree to release them. This foresight provides flexibility should the business’s or family's priorities evolve.
By NSW based Family Business Accredited Advisor
Jack Mannix - Mannix Capital
