Loan Rate Slashed For Small Business
Sun Herald
Sunday February 14, 1999
A DISCOUNT lender is offering mortgages to small businesses at 5.99 per cent to pay out all their loans and leases, undercutting one bank by almost 3pc.
Wizard has also attacked banks for charging small businesses excessive interest rates despite using the owners' homes as security.
There was no excuse for the banks to charge small business more for a loan when the same property was used for a mortgage at a much lower rate, Wizard's executive chairman Mark Bouris said.
He said that, contrary to popular belief, once you had a mortgage with a bank it also had a claim on anything else it loaned you, including on credit cards.
"In almost every mort- gage the bank has a charge over your home for every loan you get from them - for your business loan, your overdraft and your car lease," Mr Bouris said.
"There is no reason why you should be charged different rates for all of these loans."
For a typical business, savings in interest could run into hundreds of dollars a month.
Avron Greenberg, director of Seapoint Liquidators, West Ryde, said he had saved $900 a month by refinancing a $320,000 Westpac loan.
"We can splash out. I've just bought my wife a Mercedes," he said.
Mr Greenberg said he had not expected Westpac to match Wizard's 5.99pc and had been a customer for 10 years.
"I pleaded with them," he said. "They only had to sharpen their pencil a bit and I would have stayed."
The bank, through a marketing company, subsequently paid him $80 to attend two research seminars to find out why it had lost his business.
"They finished up paying me $80 to tell them what I'd been trying to tell them all along for free," he said.
Mr Greenberg said he dealt with Westpac's small business lending centre, and that he was told "you focus on your business and we'll worry about interest rates".
Small business borrowers could package a home loan, car lease, personal loan, business asset lease and overdraft at 5.99pc.
The accounts could still be kept separate.
The line of credit rate would be 6.25pc, still under banks' rates before they add a margin.
There is an application fee of $695 but no ongoing fees and charges.
At prevailing interest rates, a typical small business borrowing $340,000 at 5.99pc would save about $4,000 a year in interest.
© 1999 Sun Herald