Commercial Building Finance and Purchase Mackay and Proserpine

Create a Multi-stage Finance Strategy and Funding

Case Study: Vendor Finance Business Purchase & SMSF Building Purchase – Proserpine, Queensland

When a motivated couple in regional Queensland approached Mortar Finance, they had a big vision: to purchase two trading businesses in Proserpine and Mackay from a retiring owner, along with the commercial building that housed one of the operations. The deal was ambitious and complex, involving a low-equity position, limited cash contribution, and the need to align business and property ownership structures. Through a multi-stage finance strategy, Mortar Finance was able to deliver a successful outcome that made the acquisition possible.

Client Background and Objectives

The clients had been long-time employees in the same industry and saw an opportunity to take over two established businesses that were being sold as part of the owner’s retirement plan. They wanted to secure both the businesses and the Proserpine commercial premises in a single coordinated transaction.

However, their challenge was twofold:

1. They had limited equity and no significant cash contribution available.
2. Traditional commercial lenders were unwilling to support the purchase under those conditions.

Despite these obstacles, the clients were determined to find a path forward. They approached Mortar Finance to explore how they could structure the deal in a compliant, financially viable way that satisfied both their goals and the seller’s retirement needs.

Part 1: SMSF Commercial Property Purchase Proserpine

The first part of the solution involved purchasing the commercial building in Proserpine through the client’s Self-Managed Superannuation Fund (SMSF). Mortar Finance worked closely with the clients’ accountant to assess whether the purchase would be suitable under SMSF regulations and ensure the structure aligned with their long-term investment strategy.

Once the accountant confirmed the viability of the SMSF purchase, Mortar Finance sourced a specialist SMSF lender that was comfortable with the property’s regional location.

The lender approved finance covering 80% of the property’s purchase price, with the remaining 20% deposit and purchase costs funded from the client’s existing superannuation balance.

This arrangement allowed the clients to secure ownership of the commercial premises without needing to contribute personal cash funds, while also providing the vendor with a lump sum payout for their retirement. The property was then leased to the business on commercial terms, ensuring the SMSF generated rental income consistent with ATO compliance requirements.

Part 2: Vendor Finance for the Trading Businesses

With the property component successfully settled, the next challenge was funding the purchase of the two trading businesses in Proserpine and Mackay. Given the clients’ low equity position and the fact that they were new owners without an established trading history, banks were unlikely to provide business acquisition finance immediately.

To overcome this, Mortar Finance recommended a vendor finance arrangement, where the seller provides a loan to the buyer for the purchase of the business, with repayments made over time from business profits.

This option was appealing to both sides. The vendor, having already received a significant cash payout from the SMSF property sale, was comfortable offering vendor terms for the business portion of the deal. It provided a way to finalise the sale and retire, while still generating income from the repayments.

Mortar Finance worked with both parties and their accountants to structure the vendor finance terms so they were fair, compliant, and commercially viable. Once agreed, the buyers and sellers engaged their respective solicitors to formalise the vendor finance agreement.

The plan was for the buyers to trade successfully under the new ownership for two to three years, after which Mortar Finance would assist them in applying for standard business finance to refinance the vendor loan under traditional banking arrangements.

Part 3: Personal Debt Consolidation

In addition to structuring the property and business purchases, Mortar Finance also helped improve the clients’ personal financial position. Taking over a business meant their income would fluctuate in the early stages, so reducing personal financial stress was essential.

The team refinanced the clients’ home loan, leveraging available equity to consolidate high-interest personal debts into one manageable repayment. This strategy reduced their monthly commitments by $2,128, freeing up cash flow during the business transition period.

This step was crucial in setting them up for success, giving them the breathing room needed to reinvest in the businesses and gradually build up to their target owners’ wages.

Outcome

Through a carefully coordinated three-part finance structure, Mortar Finance enabled the clients to achieve what initially seemed impossible, purchasing both the businesses and the commercial property without a cash deposit and with a sustainable financial framework for the future.

• SMSF lender funded 80% of the commercial property purchase.
  
• Vendor finance allowed immediate business ownership and vendor retirement.
  
• Personal debt consolidation improved the monthly cash flow by $2,128.
  

The result was a seamless transition for both buyer and seller, and a clear roadmap for the clients’ long-term financial independence.

Conclusion

This case highlights the value of a creative and strategic approach to finance brokering. By combining SMSF lending, vendor finance, and personal restructuring, Mortar Finance provided a comprehensive solution that satisfied all parties involved.

For many aspiring business owners, especially in regional areas like Proserpine and Mackay, the right structure and professional guidance can make all the difference between an opportunity lost and a dream achieved.

Mortar Finance commercial lending services.