The ability to use business assets as security to obtain finance is becoming common knowledge.
The past three years have seen a significant increase in the level of adviser awareness regarding how business assets can be used as security to obtain business finance.
About 50 per cent of principals indicated they would fund growth plans through finance secured against their business assets, compared to just 30 per cent in 2005, a survey commissioned by National Australia Bank's (NAB) financial planner banking team and MLC's adviser business centre has revealed.
"Advisers are becoming increasingly more aware that they can obtain business finance by using their practice or book of business as a security, rather than their home as was commonly done in the past," NAB financial planner banking national manager Malcolm Arnold said.
Traditionally, few lenders allowed practices to secure finance by leveraging against business assets, but with most of the major banks now taking an interest in this market there are more opportunities for aspiring principals, Arnold said.
"It is rare these days to come across a young adviser, looking to get into business, that has a home or personal assets they can use as the basis for a traditional business loan," Arnold said.
"The change in appetite by the banks is a significant win for young advisers seeking to expand their involvement via acquiring equity within a practice."
NAB has enabled principals to secure finance by leveraging against their business assets for the past six years and introduced a specialist team dedicated to financial planner banking in 2007.
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