Small Business Financing in 2025: Navigating the Post-Rate Hike Landscape

Apr 22, 2025 | Borrowing Power, Bridging Loan, Debt Consolidation, Refinance

Small Business Financing in 2025: Navigating the Post-Rate Hike Landscape

Securing finance has become increasingly challenging for small businesses in 2025. Following the most aggressive interest rate cycle in decades, the lending landscape has transformed – but not all changes are for the worse.

Quick Facts

Interest rates on small business loans have risen ~3.1 percentage points since 2022
About half of all small-business credit is secured by residential property
Non-bank lenders are gaining significant market share

Key Challenges in Today’s Market

Traditional Banking Hurdles

Major banks continue to favor secured lending, creating an uneven playing field for entrepreneurs without property assets. Documentation requirements have intensified, with banks demanding comprehensive financial records, detailed business plans, and forward projections.

Higher Borrowing Costs

Interest rates for small business loans now typically range from 7-10%, a substantial increase from the 4-5% rates common just a few years ago. For a $250,000 loan, this could mean an additional $12,500+ in annual interest payments.

Where the Opportunities Lie

The Fintech Alternative

Non-bank lenders and fintech platforms are filling gaps left by traditional banks with data-driven assessments, streamlined applications, and flexible security requirements. The Australian Finance Industry Association reports significant growth in non-bank market share for SME lending.

Asset Finance: A Practical Solution

NAB reports that demand for financed vehicles and equipment rose about 10% nationally despite higher rates. Asset finance offers several advantages:

The asset itself typically serves as security
Fixed interest rates provide payment certainty
Potential tax benefits through depreciation
Preservation of working capital

Our specialized asset finance solutions can help you leverage these benefits.

Specialized Programs Worth Exploring

Green business initiatives: Favorable terms for energy-efficient equipment
Regional business programs: Targeted funding for non-metropolitan areas
Export financing: Support for international market entry

Strengthening Your Finance Position

Prepare Your Financial House

Ensure financial statements are up-to-date and accurate
Address ATO obligations promptly (tax debts are major red flags)
Monitor your business credit score

Build a Compelling Case

Develop realistic cash flow projections demonstrating serviceability
Articulate clear ROI expectations for the funds you’re seeking
Explore multiple funding sources simultaneously

What’s on the Horizon?

Looking ahead, we anticipate potential interest rate stabilization in late 2025, evolving regulatory standards for non-property-backed loans, and increased competition among lenders for small business clients.

How Sanford Finance Can Help

At Sanford Finance, we specialize in helping businesses secure the funding they need in today’s complex environment. Our services include:

Funding assessments: Identifying the most suitable options for your situation
Lender matching: Access to our network of traditional and alternative sources
Application preparation: Professionally packaged applications

Book a consultation to discuss your business financing needs with one of our experienced advisors.

50,000 Places Now Open for Home Guarantee Schemes

Jul 2, 2024 | First Home Buyers, Government Grants

From July 1st 2024, 50,000 new spots are now available for home buyers who need a smaller deposit through the three Home Guarantee Schemes.

The federal government’s Home Guarantee Scheme, which includes the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee, is now accepting applications for FY25 spots. This scheme, managed by Housing Australia, allows eligible buyers enter the property market sooner by providing them with the option of securing a mortgage with a low deposit without paying Lenders Mortgage Insurance (LMI).

Eligible buyers can apply for a loan with as little as a 5% deposit for the First Home Guarantee or the Regional First Home Buyer Guarantee, and a 2% deposit for the Family Home Guarantee. The government then guarantees the remaining amount.

Starting July 1, the available spots are:

35,000 for the First Home Guarantee (FHBG)
10,000 for the Regional First Home Buyer Guarantee (RFHBG) until June 30, 2025
5,000 for the Family Home Guarantee (FHG) until June 30, 2025

Since January 2020, over 160,000 Australians have bought or built homes with the scheme’s help. The scheme’s share of the first home buyer market has grown significantly, with almost one in three first home buyers in 2022-23 using it, compared to one in seven in 2021-22.

With the popularity of these schemes in mind, the government expanded the criteria last year to allow more buyers to apply. This included allowing friends, siblings and other family members to apply, opening up the First Home Guarantee to non-first home buyers who haven’t owned property in Australia in the past 10 years and enabling legal guardians to access the Family Home Guarantee.

Wondering whether these schemes could apply to you? Get in touch with our team today to find out what schemes and incentives you could take advantage of to make your home buying dreams a reality.

How will the 2024/25 Federal Budget Impact the Property Market?

Jun 3, 2024 | Government Grants, Property Market

Easier to read and understand, our 2024-25 Federal Budget Summary wraps up the key changes and introductions that are likely to impact the property market.

Growth Expected

Economic growth is forecast at 2% next year and 2.25% in 2025-26

Inflation to Fall

The treasury expects inflation to fall to 2.75% by June 2025 (a more optimistic view than what the RBA has forecast).

Employment to Slow

Employment growth is forecast to slow from 2.25% this year to 0.75% in 2024-25, with unemployment rising to 4.5%.

Increased Borrowing Power

Boosts from Tax Cuts

Homebuyers will be able to borrow tens of thousands more next financial year due to tax cuts aimed at lowering the cost of living.

Higher Take-Home Pay

Adjustments to tax rates will increase most taxpayer’s take home, enhancing their ability to borrow for a home.

Auction Advantage

This increase in savings could make a significant difference during home purchases, potentially being the deciding factor in competitive bids.

Advantage for Dual Income Homes and First Home Buyers

Households with dual incomes will see a more substantial impact, potentially doubling the borrowing capacity increase.

Higher interest rates have constrained borrowing capacities for first-home buyers in the past, making the tax cuts particularly beneficial. Those buying affordable properties will benefit the most from the increased borrowing capacity.

Tax Cut Timing

Banks may take a month or so to update their calculators to reflect tax cuts, but brokers can manually adjust calculations sooner – allowing home buyers to take advantage of their additional take home pay sooner.

How will the 24-25 Federal Budget impact your property goals?

Wondering how this will impact your property goals? Whether you’re looking to buy, sell or invest, our team is here to help. Get in touch today to see how we can help make your property goals a reality.

Everything you need to know about buying off the plan and securing finance

Aug 1, 2023 | Investment Property, Purchase, Self Managed Super Fund (SMSF)

There are many different ways to purchase property – and one of those ways actually involves committing to purchasing a property that doesn’t yet exist.

Buying real estate ‘off the plan’ means committing to purchasing a property that is still in the pre-construction or early construction phase, often long before a building or development project is completed. Many home owners and investors see buying off the plan as a good way to purchase a brand new property, however, just as with any investment, there are pros and cons to consider – so let’s have a look at them.

The benefits of purchasing property off the plan

Lower Purchase Price
One of the main attractions of buying off the plan is the potential to secure the property at a lower price than it would be once construction is finished. Developers often offer discounts and incentives to early buyers which can result in significant savings.
Potential Capital Appreciation
In a rising property marketing, purchasing off the plan can be a smart investment strategy. As property values will likely increase during the construction period, buyers may benefit from capital appreciation ever before they’ve settled on the property.
Customisation Opportunities
This benefit particularly applies to home owners, but also provides investors with opportunities to boost their potential rental income. Purchasing off the plan often gives you the chance to customise certain aspects of the property, including selecting finishes, materials or layout preferences to suit their specific needs and tastes.
Delayed Payment
When purchasing off the plan, buyers typically pay a deposit upfront and the rest of the purchase price upon completion. This extended settlement period provides you with extra time to save or secure finance.
Stamp Duty Savings
As Stamp Duty is only payable on the land for off the plan purchases, you could be savings thousands of dollars on your purchase.
Deposit Options
Whilst most buyers pay cash to secure their deposit, purchasing off the plan provides you with other more flexible deposit options to consider, including Bank Guarantees and Deposit Bonds. It’s always best to check with your property consultant as to what method of payment the develop is happy to accept.
Tax Advantages
Being a new property, investors can claim depreciation which is a major tax incentive. This helps to reduce the ongoing costs of holding the property, allowing you to build a larger portfolio.

The disadvantages of purchasing property off the plan

Uncertainty
One of the things that potentially buyers are often afraid of is the uncertainty of buying off the plan. As the property is yet to be constructed, buyers have to rely on floor plans, artist impressions and development promises as they’re not yet able to see the final product.
Construction Delays and Risks
Construction projects can face unexpected delays due to various factors, such as weather, planning permits, development applications or financial issues. These delays may result in buyers having to wait longer for the property’s construction, impacting their plans.
Market Fluctuations
Whilst a rising property market can bring capital appreciation, a declining market can have the opposite effect. If property values drop during the construction period, buyers may find themselves with a property worth less than they originally paid.
Changes in Financial Circumstances
A buyer’s financial situation may change between time of purchase and completion, as well as general economic circumstances. This can make it harder to secure financing or meet the financial requirements during settlement.

How can you mitigate risk and increase your chances of securing finance for your off the plan purchase?

As mentioned above, economic or personal circumstances may change between the time of purchase and completion, however, below is what we always recommend our clients do to ensure they can reduce risk and have the best chance of securing finance for their property:

Increase your savings
This will help to cover any unlikely shortfalls
Do not apply for any lines of credit during this time
Don’t be tempted by credit card offers and avoid signing up for any additional lines of credit whilst waiting for your property to be completed. This could impact your borrowing capacity or credit rating.
Ensure all commitments are paid on time and up to date
No lender likes to see late or outstanding payments, so make sure you’re paying all commitments on time.
Don’t change employment
Some lenders can have issues with short term employment so it’s important that you chat to us should your employment change.
Maintain or reduce your living expenses
Increasing your lifestyle costs may reduce your borrowing capacity so it’s important to keep an eye on your budget.

What should you consider when purchasing off the plan?

We’ve talked about the pros and cons, but what things do you need to consider when purchasing off the plan?

Research the developer
You want to make sure that you thoroughly research the developer’s reputation, track record and completed projects prior to committing to an off-the-plan purchase as this will give you an idea of their creditability and their quality of work.
Understand the Contract
Ensure you carefully review the purchase contract with the help of a legal professional. Pay close attention to clauses regarding potential changes in the property’s design, timeline and provisions for compensation in case of construction delays.
Finances
It’s important that you know what you assess your financial situation and consider the risks associated with the investment before committing. When working with Sanford Finance, we’ll sit down to work out your goals, discuss potential risks and action plans and discuss contingency plans in case of unforeseen circumstances to ensure you’re not jumping into anything you’re not prepared for.
Location and Market Analysis
Think about the location of the development and its potential for future growth. Consider things like the demand for similar properties in the area and evaluate the long term investment potential for the property.

What finance options are available during the construction phase?

Purchasing a property off the plan can be quite stressful and challenge even the best laid plans, however, our construction loans take a lot of stress out of the equation.

A construction loan most commonly has a progressive drawdown where you receive instalments of the loan at various stages of construction, rather than receive it all at once at the start.

This means that you generally only pay interest on the amount that is drawn down, as opposed to the entire loan amount.

A number of lenders also offer construction loans that are interest-only during the construction period, later reverting to a standard principal and interest loan once the build is complete.

Construction Loan Case Study:

Craig and Belinda are purchasing land for $300,000 in Adelaide and building a new home for $400,000 for a total value of $700,000. They are borrowing 95% or $665,000. Assuming an interest rate of 5.95%, the repayments required by Craig and Belinda during the build phase will look like this:

Current Loan	Current Loan	Current Loan	Min. Monthly Repayment Required
Land Loan	Nil	$265,000	$1,314 IO
Deposit 5%	$20,000	$285,000	$1,413 IO
Base 15%	$60,000	$345,000	$1,710 IO
Frame 20%	$80,000	$425,000	$2,107 IO
Enclosed 25%	$100,000	$525,000	$2,603 IO
Fixing 20%	$80,000	$605,000	$2,999 IO
Practical Completion 15%	$60,000	$665,000	$3,966 P&I
Totals	$400,000	$665,000

IO = Interest Only P&I = Principal and Interest

In the above table we can see that the repayments steadily increase over time and are interest-only during the build phase. Once the final payment is made, a construction loan will generally convert to Principal and Interest repayments.

How do you get started?

Buying off the plan can be exciting and nerve wracking all at the same time, but we’re here to help. We’ve helped many clients secure their dream property or investment property off the plan and know what you should be looking for, what lenders are looking for and are here to help you navigate the off-the-plan market more confidently.

Ready to get started? Contact us today!

Evaluating the property market in Australia: Is now the time to buy or sell?

Jun 1, 2023 | Property Market

The decision to buy or sell property is always a tricky one, as it’s a significant financial step that involves careful consideration of various factors – including market conditions.

Whilst it’s important to know that real estate markets can be unpredictable, understanding the key indicators can help you to make an informed decision. So, let’s look at the factors influencing the Australian property market.

Low Listing Numbers = Increased Competition for Buyers

With decade-low listing numbers, there’s not a lot of competition in the market for vendors – but competition is fierce for buyers as they battle it out to secure a property. This is one of the reasons that selling conditions have strengthened, as evidenced by above average clearance rates, faster selling time and less negotiation.

The total number of homes listed for sale across Australia is currently 28% below usual (as reported by CoreLogic). When these volumes are low, selling conditions strengthen, meaning that potential vendors thinking about selling may jump in now rather than waiting until the traditional spring period where activity surges and there’s a spike in competition.

Rising Prices

Home values for Sydney, Melbourne, Brisbane and Perth all recorded an increase in housing values from the lows recorded in February. A mid-month update based on CoreLogic Australia’s daily Home Value Index showed the upswing gathering momentum, especially in cities such as Brisbane where the index is up 1.0% over the past four weeks whilst the Sydney property market still remains the strongest.. Considering housing affordability measures remain stretched such a strong rate of growth is surprising, with many experts predicting that this price rise will not be sustainable in the long term.

Low Supply vs High Demand

As mentioned above, decade-low listing numbers and high demand has lead to fierce competition between buyers – as seen in auction clearance rates that have been holding at 70% or higher in recent weeks.

In a time where the market traditionally tends to cool off, the stats suggest that, if anything, the market is gathering momentum instead of slowing down. Strong clearance rates as well as faster selling times and reduced discounting rates indicate that it’s definitely a vendor’s market.

Recent data from the National Housing Finance and Investment Corporation shows a 115,000 dwelling undersupply for 2028.

Interest Rates Continue to Rise

The biggest challenge for potential and current property owners? Interest rates. With interest rates continuing to rise, demonstrating an ability to service a loan remains one of the biggest challenges for prospective buyers to face.

Interest rates are high, but assessment levels are three percentage points higher again – making it even harder for buyers to enter the market or secure their dream property.

Economic Uncertainty

In addition to rising interest rates, we’re also in the midst of a cost of living crisis where consumer confidence is low.

Should RBA cut interest rates, there’s a good change we would see a pick-up in both buyer and seller activity. It’s also highly likely that lower interest rates would be the catalyst for a further uptick in housing values, however, we’re not expecting a rate cut anytime soon and there’s speculation that rates may continue to rise this year.

Economists are split on their forecasts with predictions for further rate hikes, stability and some cuts later this year – all contributing to uncertainty and low consumer confidence levels.

A Helping Hand

Government policies and regulations play a crucial role in shaping the property market. Policies related to taxation, lending practices, and housing affordability can have both direct and indirect effects on the market.

At the moment, first home buyers in particular have a wide variety of grants, concessions and schemes available to them (outlined in our First Home Buyer Update here) that could make purchasing a property easier and more affordable.

Migration Predicted to Recover

With net overseas migration set to fully recover to pre-pandemic levels there will be more pressure on the housing market than we’ve seen in recent years.

With the return of international students and the surge in migration, it is estimated that an extra half a million people will be looking for somewhere to live in Australia in the next two years.

Low vacancy rates bringing investors into the market

We are experiencing a rental crisis across the country, with historically low vacancy rates encouraging more investors into the market. Unfortunately for investors, rising interest rates and property prices have made this challenging – as well as rising building costs making it harder for investors and developers to buy and renovate or rebuild.

Is now the right time to buy or sell?

In short? Maybe. Unfortunately it’s not a one size fits all answer.

Ultimately, making an informed choice that aligns with your own circumstances and long term goals is key when navigating the property market.

Luckily, we’re here to help. We’ll sit down to work out what your goals are, what your property budget may be and how we can help you secure a property. Contact us today to get started!