Start with usable cash
Write down the amount advanced, subtract fees deducted at settlement and subtract any old debt paid out. The result is the cash available to your project. A 100,000 approval with 3,000 withheld costs and a 20,000 refinance payout leaves 77,000 of new usable cash. Keep owner contributions separate so they do not make one finance offer look larger than another.
Collect the complete cash-flow schedule
For each offer, record every payment date, compulsory fee and final balloon or purchase amount. Ask which costs change if the rate moves or the borrowing is repaid early. Business.gov.au’s comparison checklist includes charges, fixed or variable interest, loan sizes, terms, security and restrictions.
Source: Australian Government: comparing loan products ↗
- Net cash received on settlement.
- Scheduled payments, with their actual frequency.
- Fees paid separately, final payments and security obligations.
- Payout balances on the dates you realistically might exit.
A factor rate is not APR
An illustrative factor of 1.20 on 50,000 implies 60,000 of contracted repayments under that simplified calculation. It does not mean a 20% annual interest rate. Timing, deductions and the falling outstanding balance matter. Do not convert a monthly rate to an annual cost by relabelling it. Request an annualized cost calculation with its assumptions or have an adviser compute it from dated cash flows.
Build a decision rather than a rate ranking
Record three outcomes: total expected cash cost, the largest payment burden and the downside exit cost. Then compare non-price constraints, including reporting, covenants, guarantees and what happens if the project is delayed. A proposal that costs less but cannot fund on the required date may not solve the need; an expensive rushed proposal can also be avoidable if the purchase timetable changes.
- Use the same currency and exchange-rate assumption.
- Distinguish an indicative quote from approved and documented terms.
- Keep provider marketing rates separate from the offer addressed to your business.
Take the next step
Put your proposal beside the cash-flow forecast. Check the net proceeds, payment dates and obligations before deciding.
Examples are hypothetical and use stated assumptions, not provider quotes. Sources describe public information checked on the date above. Availability and terms can change. No independent professional review is claimed.