Farm or business debt needs caution in uncertain seasons

Farm or business debt needs caution in uncertain seasons

ABARE executive director Jared Greenville completed a recent article for farmers on volatile seasons with these words:

“Rather than growing the size of the enterprise or productivity by much, they’re setting the business up to manage the downside risks by simply not being as eager to borrow.”

These are wise words because the future looks quite risky when it comes to  refinancing. But it is not only farmers who need to think carefully. Family businesses are under threat from climate change, the economy and big business. It pays to reduce risk in times like this to avoid a major disaster if things go wrong. Recession is looming in many places. The best way to  minimise risk is to look for ways to relieve cost pressures. Debt relief would be one of the first.  A perfectly happy  loan can morph into a dangerous  debt in just one or two years. That can also happen when banks appoint receivers to manage the business or farm.

Banks have been very lenient to borrowers since Covid. There are signs that they are starting to lose patience with  loan defaults and look to recovery action like receivership. The current boom in prices of real estate has been partly caused by a decade-long boom. Banks seeking to recover debt, may seek to sell mortgaged properties before the boom busts. Many small business loans are secured by a mortgage over the business owner’s home

“Borrowing in good times; Refinancing in the bad”.

The annual Profit and Loss statement often shows banks earning more out of the enterprise than the business owner or farmer. A business loan consultant would know that dangerous debt can be reduced by a variety of means. The sale of an unproductive block may be one way. A write-off by a bank that has treated the borrower badly might be another.

Debt refinance can allow a farm or business loan to be cleared much faster or managed more easily. Borrowers coming to GBAC find, that negotiations with the bank can sometimes yield them more profit than they have earned for years in the business or farm. That particularly applies to those who have been tricked by the bank into unaffordable debt.

In running my own equipment and art hire businesses in Sydney I paid very close attention to my loans and creditors. Developing techniques and strategies with Profit in mind was the main goal. That is because profit is the main way of clearing any business debt.

Business or Farm Debt Refinancing

To make sure business owners, including farmers, get the right loan at the right price with the right loan terms we invented the “Farm Loan Seeker” (FLS) service four decades ago. Today it is an electronic means of borrowing without using an expensive bank-paid mortgage broker that just adds big costs to the loan. When a bank pays a broker up to $10,000 in brokerage to deliver customers on a plate, it expects to make a lot of money out of them. My view is to keep the total borrowing costs as low as possible.  Business and farm borrowers can do their own loan hunting very successfully online with an FLS. The inexpensive FLS comes with a guide on dealing with the bank to get the  best deal. GBAC will provide inexpensive optional support  for various parts of the process if needed.

Borrowers should not assume that the people offering them a loan will look to their interest before their own, any more than the person buying from them will. People look after their own interests first. The Farm Loan Seeker we originally invented in 1987 when banks were first de-regulated. As well as helping other business owners get a fair go from the banks, I was running my two hire companies and a sheep property at the same time. A borrower should never trust the lender to do all the work. Lenders can be ruthlessly efficient at looking after their own interest. That often means agreements that put the borrower at a disadvantage.

Refinance Risks

Why refinance can have risks.

Refinance risks can vary, depending on a wide variety of circumstances. That is because a person who is refinancing is sometimes under more pressure than before. If refinance is not arranged within a specified timeframe, the existing bank could threatening receivership, appoint a manager or foreclosure and sale at auction. The borrower is looking for loan relief.

The best way to deal with that problem is to turn the tables on the bank from whom one is refinancing, by researching its behaviour to identify where it broke the law, the code of conduct or fair trading laws and then sitting down and telling it some home truths about what happens when you raise that by Votergram to some 225 Federal Politicians

Assessing refinance risks by comparing loan repayments against farm profit

“Generally, farmers’ confidence in the agriculture sector drives the demand for debt to fund land and capital acquisitions,” a banker said recently. The average farm profit was reported as $29,000. While many smallcountry roads businesses are not so vulnerable to weather and commodity prices, many are with our major cities somewhat dependent on beach weather. Recent floods have devastated many businesses. Often such disasters dramatically reduce the security value of  a mortgaged property. That is the ideal time to start gentle negotiations for the bank to write off a good bit of the debt. When the debt is reduced, the chances of refinanced are enhanced. Those who have played their cards right will often find themselves refinancing a much smaller debt. That is converting risk into advantage.

A Borrower’s Budget

It is vital for farmers and business operators to find out exactly how many dollars a year they will pay in loan repayments. Then compare that to their budgets. Make certain that the budget reflects the current reality rather than a fairy tale invented for a bank. Loan repayments and interest have to come out of  profit. It is rash to think that the farm loan or the business loan will produce extra net profit. It often does no such thing and even if it does, it usually takes a few years to do so. A borrower’s budget is their best friend. It should regularly compared with the  same period in the previous year and the actuals in the present year.

There is usually a big difference between the total income or turnover of the enterprise. Profit is the bit left after expenses. Loan repayments must be made from Profits. Don’t be misled by turnover!

Refinance Options

The problem is that a even a loan refinance can quickly turn into a debt trap. This can happen with a couple of bad years if the economy crumbles or flood waters cut business. My first reaction when confronted with refinance or even original loans has always been to seefarm in drought if it is possible to achieve the same result without borrowing from a bank.

Over the years, I have shown farmers a variety of alternatives, from savings, to interest-free loans and trade-offs.

Assets can be acquired without getting the bank involved. Publicised interest rates and charges are not the best that can be achieved when borrowing. Offers of special rates and reduced charges requires negotiation. Those wanting to borrow on best terms and conditions, the “FarmloanSeeker” or “FLS” targets an enquiry to a range of banks. It is an easy way to check out what is available. Then negotiate the very best and cheapest loan possible.

Debt help!!

The need for Debt help

This year CBA will earn 10,000 times as much in real money terms as it did before bank de-regulation. The banks are pulling in massive profits just as their customers are drowning in debt. Why? Because the banks have been marketing their mortgage loans to borrowers with big asset backing and those borrowers  are now drowning in unaffordable debt as the bankers knew they would. But in the process the banks have often broken the law and the Code of Banking practice as well as fair trading regulations, all of which the recent Royal Commission identified, but did not compensate borrowers for the damage done.

Traditionally we individual Aussies trusted the banks and put up with the way in  which they treated us. That was because there was not much else we could do. To fight a bank in court could cost millions.

GBAC has found that by analysing and researching facts, figures and bank behaviour  it often turns out that the borrowers have been deliberately tricked into loans with impossible terms that the borrower did not read. The banks often banked on that, particularly with busy family business owners and farmers who were more skilled in their own enterprise than borrowing and just trusted the banks to do the right thing. Prior to de-regulation the bank would have done the right thing.

Turbocharged Voter-Power for borrowers

Today mortgage borrowers, in their role as voters have great sway over government because GBAC realised that Parliament controls the bureaucracy which delivers government and  the voters, control who sits in parliament.

GBAC has developed the Votergram Turbocharge system that allows each and every borrower to tell every single member of any or every Parliament, what the bank has done to them, how unreasonable the bank has been and how disastrous bank de-regulation has been when borrowers are literally robbed and financially abused so that banks can earn billions and their executives can earn multi-million dollar salaries.

Many banks faced with the option to sit down and sensibly discuss how best to deal with the debt in a way that treats the borrower fairly or have the matter discussed by the federal parliament, opt to confer with the borrower and GBAC’s negotiators for an outcome that is fair to the borrowers first. They are after all the customers and the most vulnerable party. If the bank does not act fairly the borrower with GBAC’s assistance can Turbocharge the campaign for a fair go, by Votergram for help

Today there is a completely free association of voters all over Australia. It is called the Australian Voters Network or Voters. It has no party politics and exists only to help and educate its members to persuade the parliaments to improve the fairness factor in Australian government policy. The more who join and share their own experiences, the fairer Australia becomes. It fits with the National Anthem doesn’t it? It is a good organisation for borrowers to join because it can help them a great deal when the crunch comes on.

Banks and Big Businesses Monopolies

For a long time the moneylending banks and big business monopolies have controlled government by bribing our elected MPs with election donations and bullying them with highly paid lobbyists. It looks as though the federal parliament is going to reduce that and such a move will again help borrowers in trouble with their bank.

Anyone wanting to learn a little bit more can contact  GBAC which is run by a former Chartered Accountant / CPA who has run family businesses and farms as well, so knows just how hard it can be to clear big bank debts.

Democracy is the best system of government in the world, but only when driven by the voters to fulfil its potential. Government for the people comes from government by the people via their parliament. Borrowers have a great resource in their parliaments and GBAC has developed the tools to help them access it.

Join Voters now and Turbocharge your Voter-Power. Then give GBAC a call and see how they can help you. If bank behaviour has really upset you, you can go to the BankWatch site to record what happened so that it can be taken into account in submissions to government.

Greg Bloomfield

Debt Solutions for a Borrower

“The Winning Borrower” 

“I was phoned one day by an IT executive, just after I had spoken to a farmer whose total crop proceeds had been seized by the bank. The IT expert had a similar problem. His bank account had also been frozen after a large deposit had been made into the account. The bank’s receiver took it all.”

So begins “The Winning Borrower”, the story of how one Sydney Chartered Accountant with a farming and family business background became a “bank loan consultant” and took on the big banks to provide Aussie debt solutions for Aussie farmers and business owners.

Baseball bats to battle bank debt issues

In the process of negotiations, mediations and refinancing, he discovered the disturbing details of how banks lied, cheated and trapped  farmers in debt they could not clear without selling the farms and did the same to business owners who had mortgaged their homes. The author relates how untrustworthy banks have exploited customers in their quest for multi-billion-dollar profits. He takes a metaphorical baseball bat to the bankers, explaining how some of his  clients ended up making more profit out of their loan settlements than out of farming or business.

Royal Commission investigates bank loan problems

The day the Prime Minister announced that there would definitely not be a Royal Commission into the banking industry, the author sent a Votergram to each one of the 225 Federal MPs decrying the decision. Within days the decision was reversed and the Royal Commission announced.

Author makes book free to farmers during March

The Winning Borrower” 85 page e-book by this businessman,4th generation farmer, Chartered Accountant and CPA , who became a bank loan consultant by accident, is available during March as a FREE e-book to help business owners and farmers all over Australia enjoy more profitable and secure lives.

Benefits of Financial analysis

Financial analysis

Business financial analysis are the last thing that gets the farmer’s attention, but are a necessary part of a successful business operation.

Measurements and financial analysis

In business we pay a lot of attention to measurements – micron, moisture, calving rate.

Yet we mostly ignore the money measurements. Frankly they are not half as interesting.

My grandfather was a Queensland drover, then bred sheep and cattle at Coonabarabran before establishing a property development and building company in Sydney.

Accounting

Before I qualified as a Chartered Accountant/CPA, when I turned 21 he  invited me onto the board of his company. He gave be a set of financial statements from the accountant, to read over. They might have been written in Russian for all that they meant to me and perhaps to him. Many years later they mean more to me than measuring  the micron of our sheep at Tullamore, the soil moisture in the cropping paddocks or the calf birth weights and calving rates at Braidwood.

Financial statements tell stories

Financial statements tell stories to financial analysts that they hide from others. Over one or two years they reveal a great deal about the money management side of a farm. Over a decade they provide the data that can enable a business owner to make much more money per product of service.

It does not matter whether the business is coping with downtime or debt, or enjoying the best seasons in decades. The figures reveal the secret of making more money. We work to enable us to live the very best life-style in the world. But the more money we make out of it, the more enjoyable it becomes.

Many matters depend on wise financial analysis

When we sit down with business owners to chat about  restructuring, succession planning, expanding or getting the bank off their back, their past financial statements have the information needed to set them on the right track. The figures and graphs we extract, tell the business owner what they can afford and how they can best afford it. They also reveal why they might be finding cashflow very tight. An important part of financial analysis can highlight how their toil is supporting the multi-million dollar bank’s CEO’s salary.

Money in your bank account, not the bank’s.

For many, those figures enable us to put more money into the farmers bank accounts than into the bank’s own coffers. At farm debt mediation they earned one farmer $5 million. When refinancing, good financial analysis can help shave the interest rate being paid for the next 20 years. This could even eliminate the need for debt at all. Loan and debt problems are not unique to business owners, but the financial climate can turn profits into losses overnight. Some commodities have a very short “self life” like consumables.

Be careful who you borrow from

The good thing about a bank loan is that one can talk to the bank. Borrowing from a non-bank lender, one of my clients had been faced by a debt collector who said  to the person not making loan repayments, “How would you like to end up in the dam with a lump of concrete around your feet?” Even when a bank debt is seriously behind we have found that the bank will deal with it sensibly. Physical violence is not part of their recovery process, even though financial abuse is. However, business owners need to treat any threat by the bank seriously. Because a bank can foreclose on the business, appoint a receiver or take insolvency action against them. Call a consultant fast if that happens, because that can cost a business owner a fortune and lose the operation in a flash.

Use an accountant who has been paid for producing the figures.

Figures that cost a business owner heaps for the accountant to prepare, turn into a technicolour landscape in the hands of a skilled financial analyst.  Studying accounting enabled me to run the Australia-wide GBAC consultancy, run and equipment hire business, an art rentals business, own and run sheep and cattle farms. At the same time, developing the most effective political persuasion tool in Australia, the Votergrams. I thank all those business owners and accountants who at conventions and conferences or just as neighbours, shared their knowledge with me. That knowledge, I can now pass it on to others.

What I have learned is that there is almost always a good solution to any problem. The dull old financial statements that have been paid for to do tax returns can often help provide those good solutions.

Greg Bloomfield

Banks grow but their customers lose

Banks grow but their customers lose.

In 1987 before bank de-regulation and sale of government banks to private profiteers, CBA made a net profit of $333,000, RBA inflation calculator puts that at $964,000 in today’s money.  Call it $1 million. Bank customers lose out.

This year CBA will earn about  $10 billion, $10,000,000,000, 10,000 times it’s pre-deregulation earnings. Bank loan customers like Home buyers, business debt or farm debt holders lose most.

Government owned bank

If we had a bank owned partly by the government and partly by the bank customers in the style of Bendigo Community bank, the people of Australia could enjoy better, cheaper banking services and be richer. Bank loan consultants like us could do more productive things than debt mediation, stopping foreclosures and farm debt mediation.
The big four billionaire banks and their multi-millionaire executives would change tack and compete for your business by reducing their outrageous charges and increasing your benefits.

Make it happen!

To make this happen, please go to go to www.bankwatch.au. Click the “Tell us” tab, click on “ Better, fairer banking industry”, add your details and submit. The Votergram system can persuade as many of the 225 federal MPs that this would be good for them too.

Bank branch closures

Bank branch closures deprive bank customers of Benefits.

CBA makes $833 million a month, $10 billion a year, 10,000 times what it made in 1987 before our politicians firstly deregulated banks and secondly sold off the honest government owned banks to eliminate competition.

Meanwhile:
banks close their branches and ATMs to make more profit  AND
Their multi-millionaire CEOs tell us that mortgage stress is causing borrowers to fall behind

Bankers control government

Banks can do what they choose including closing bank branches and reducing its services to bank customers

A government regulation prevents me  or my bank loan consultant firm GBAC from helping home-buyers in trouble with their mortgages as I have done for farmers and businesses for decades. All over Australia GBAC delivers big financial gains to borrowers at farm debt mediation, business debt mediation, refinance. In negotiations it delivers substantial debt write-offs.

Why do politicians prevent us from helping home buyers? Bankers control government because political parties and politicians need bank loans to buy homes, negatively geared investment properties and to fund election campaigns etc. MPs however, usually earn enough to avoid loan problems like foreclosure with overdue bank loans.

How do we stop our Members of Parliament selling us out to dishonest banks? It is not that the politicians are dishonest too. It is just that they need money like the rest of us. Banks hold them to ransom!

Stop financial abuse of borrowers and bank branch closures

You can help stop this financial abuse of borrowers from ending in foreclosure and forced home sales:

  1. Go to www.bankwatch.au and briefly tell Bankwatch about your mortgage stress. Most mortgage stress is caused by the bank, not the borrower, so don’t think it is your fault.
  2. Join Voters Network. It is free and it gives you enormous power and influence to protect yourself and your family from abuse or neglect by banks or governments.

When we Australian voters work together with our elected Members of Parliament we create a far better society. Politicians are just ordinary Australians trying to do a very difficult job of pleasing 27 million Australians. They can really only please those who get alongside them, tell them what should be done and explain why it should be done.

Bank entrapment of borrowers

Bank entrapment of borrowers

Bank borrowers can be fooled into a false sense of security.

In Chapter 17 of the Code of banking practice the banks undertake to:

“If we are considering providing you with a new loan, or an increase in a loan limit, we will exercise the care and skill of a diligent and prudent banker.”

“If you are a small business, when assessing whether you can repay the loan we sill do so by considering the appropriate circumstances reasonably known to us.”
These clauses are widely believed to mean that the bank will use that care and skill to avoid lending the customers into unaffordable debt.

The banker and the farmer

That however is not said or suggested in the code. The most profitable loan for a banker is one that the borrower cannot afford repay or service but is secured by real property of far greater value than the loan it secures. Farmers, affected by weather, commodity prices and government policy are ideal targets, whose skill is related to livestock, crops and the land, not financial statements, loan projections and budgets.

Selling up security

When the customer cannot make a repayment instalment the interest rate often increases and the debt builds up the customer pays what they can which is first allocated to interest. The bank earns an increasing share of the business income each year. After many years the debt may have risen by millions and is approaching the value of the security the bank will sell the property up. The borrower will lose all the money they have poured into the loan over the years, perhaps a decade of more and lose the property with which the loan was secured.

Taken for a ride

The bank did use its care and skill as a prudent banker. It protected itself all the time, making sure it had good mortgage security and could recover the debt in full by selling up the borrower. For the bank and its shareholders it was very prudent. It just made the bank part of a small fortune. The loan was probably approved by AI.

But it took the borrower for a very expensive ride.

The Big Bad Billionaire Banks

It is to protect bank customers that GBAC has worked hard over the last 40 years. It helps the borrowers to see the traps in the bank offers and to exercise their own care and prudent behaviour to protect themselves from predatory moneylenders, particularly the big billionaire banks.

HI – Human Intelligence wins the day

It is possible for borrowers to obtain good, suitable and reasonably safe loans, but it requires a good bit of work and recognition by the borrower that the bank will exercise the care and skills of a diligent banker to earn itself the maximum amount it can from the loan and it expects the borrower to understand that what the bank earns the borrower loses.

GBAC offers a HI (Human Intelligence) service from negotiating the best loan in the first place, managing that loan through and clearing the debt and recovering the title deeds at the end. The is the way for borrowers to make money out of borrowing.

Fake bank debt dispute resolution

Fake bank debt dispute resolution solutions.

John Collett in SMH Money 24 January 2024 highlights problems with 100,000 complaints to AFCA. Australia’s Fake Complaints Authority. This free bank debt dispute resolution service is an industry internal complaints body, provided by the banking industry, for their own benefit. It is a FAKE, in pretending to be a “Government  Authority”. Hoping to get your bank disputes resolved by a shop front with no teeth can leave you feeling disappointed.

Government owned banks.

Get a fair go from dishonest banks. Contact a genuine bank loan and bank debt consultant like  GBAC. In addition, those taken down by their bank may want government control of banks for a fair banking industry like Australia had before de-regulation  in 1987. Bankwatch can help you persuade Federal Parliament to re-introduce government owned banks to provide honest competition.

Bank dispute resolution trends.

Australia cannot afford to have businesses foreclosed on and sold up or  sent to Debt Mediation. Thousands of small to medium sized family businesses are tricked into unaffordable loans.  Moreover, unaffordable loans can result in  receivers appointed, assets stripped and sold off.

Resolving bank disputes.

It is no good expecting free advice from the banking industry to make the banks pay up for the damage to their customers. GBAC can provide good business debt consultants to help write off interest-inflated debt caused by dishonest bank practices.

Succession plan for farm foreclosure?

Saying “No thank you”

Young farmers will be better off if they decline offers of farm succession based on them borrowing an interest-bearing farm bank loan. Their retiring parents and the farm will be safer too.

The inclusion of potential bank debt problems on top of fire, flood, drought, commodity prices and government policy, can be destructive to any farm family. I changed GBAC from  a Chartered Accountancy firm to a farm debt consultant once banks were deregulated. They were promoting “asset lending” – loans that depended on sale of the farm, rather than farm profits, to repay the debt.

Debt enriches banks

Succession planning debt enriches banks, impoverishes young farmers and puts farms at risk. Serious lateral thinking by experts familiar with farming  and bank loans will tailor a safer alternative for those who want to keep the farm in the family.

Passing on farm debt is rarely beneficial, so rather than refinancing debt to the youngsters, every endeavour should be made to clear all mortgage debt first, so the younger generation can begin with a clean slate. It is nothing like as hard as is thought.

Personal experience

When selling my Merino breeding  farm to buy the beef cattle property that had been settled by my great-grandfather, the asking price was many times higher than what I had expected. That was due to a recent nearby sale at a price an agent called “ridiculous”. I could not have afforded interest as well.  So I devised a plan that I could afford. It involved minimal  external debt and it worked extremely well for my relative-vendor.

Good succession planning avoids the need to call in a farm debt consultant when the bank has appointed receivers to run the farm. The last thing any young farmer needs is a debt problem that leads to farm debt mediation, the forerunner to potential foreclosure and sale of the farm.

Avoiding mortgage stress

Bank debt is offered by banks because it converts farm revenue to bank revenue. Better to keep the money in the farm’s saving deposits and avoid the mortgage stress.

Greg Bloomfield