Residual Stock Finance

Critical information sheet

Our loan guide

Loan amount

Starts from $100k

Interest rates from

From 10.99% p.a.

Loan term

Up to 36 Months

Pre-approval time

24 – 48 hours

Unconditional approval & settlement time

10-15 Business days

Repayments

Interest Only & Capitalised Interest

Security

Underlying residual stock

What you need to know

Can be used for

To release equity out of the completed projects

To invest into a new project.

Documents required

Valid identification proof

Security Details

Exit Strategy

Others depending upon loan product

*The information provided in critical information sheet is intended as a guide only. Please contact us for more information.

What you should know about Residual Stock Finance

Have questions? Speak to our experts!

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Who is a residual stock loan for?

Residual stock funding caters to property developers who finish a project but still have unsold dwellings. Having unsold dwellings can create a significant financial gap even though they can generate some income by renting out the unsold homes, the profit is considerably less compared to selling them.

Developers may end up with unsold stock due to a market downturn, making their selling prices seem high. Alternatively, they might intentionally hold back some properties to prevent oversupply in the market.

Pros and Cons of Residual Stock Finance

Pros

Financial Relief: Residual stock loans offer a solution for developers facing financial challenges due to unsold stock.

Refinancing Advantage: Developers can transition from a higher-rate construction loan to a lower-rate residual stock loan.

Extended Loan Term: This transition allows for an extended loan term, providing developers with more time and flexibility.

Reduced Pressure: With the extended loan term and lower rates, developers no longer feel compelled to hurriedly sell unsold stock, avoiding the risk of accepting lower prices.

Cons

Possibility of Over-Leveraging: Relying heavily on inventory-based loans can lead to over-leveraging, posing financial risks during challenging times.

Impact on Credit Score: Defaulting on payments can negatively affect the business's credit score, making future financing more challenging.

How does a residual stock loan work?

A residual stock loan is a short-term agreement that is tied to stocks/properties that have not been sold yet.

This financial solution usually involves refinancing, transitioning from the original property development finance, which may have a higher interest rate, to the new residual stock finance with a lower rate.

It's important to note that terms can vary significantly among lenders in the world of property development finance. Typically, residual stock finance loans have durations ranging from six to 36 months, with loan-to-value ratios (LVR) falling between 40% and 70%.

What properties are eligible for Residual Stock Finance?

Residual Stock Finance is open to both commercial and residential properties. The loan can be utilised for refinancing an existing development facility loan or for accessing cash.

How much can I borrow?

Typically, it’s only private lenders that offer this type of so-called take-out finance, but we have a couple of non-bank lenders on our panel that can help.

Borrow up to 70% of the value of each unit.
Max loan amount: Loans over $5 million considered on a case-by-case basis.
Max loan term: 1-2 years on an interest only term.
Low doc options are available.
Bad credit loans are not available.
Lenders prefer developments in metro locations.

Overall, It's important to note that the financing for a larger number of units may result in a lower Loan to Value Ratio (LVR) qualification. This is because funding numerous units presents a higher exposure, which is a risk that many lenders are hesitant to undertake.

How do I apply for a Residual Stock Finance?

Submit Application

First step is to simply fill out the application form with the required information and loan request.

Get Indicative Quote

Once the application is received, our lending specialist would get an indicative quote within 24-48 hours.

Letter of Offer (LOO)

Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.

Valuation and Legal Docs

On receipt of signed LOO, the lender would initiate valuation and get loan docs prepared.

Disbursement

Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.

Why should you choose Broc Finance?

In a short tenure, Broc Finance has helped Australian businesses, especially the SMEs to secure diverse financing options and facilitate the same via credible lenders. We have a robust network that comprises the top lenders in the country. Our accessibility to varied business loans makes it easy for businesses to get the kind of financing that’s best suited for them.

Tailor made options

Being a small business owner, many of our clients are not sure of right loan product for their businesses. Our lending specialists understand their needs and recommend tailor made options.

Personal Consultation

Unlike business loan marketplace websites which use AI based algorithms to match your requirements, we provide obligation free personal consultation as every business is different and an AI based algorithm may not provide them the optimum solution.

Competitive Pricing

We endeavour to achieve the optimum business loan solution for our clients at the most competitive pricing possible.

Clear communication

We understand the essence of time so don’t believe in wasting our customers time by giving false hopes. Transparent and clear communication is in our DNA.

Real results with real people.

56+ customer reviews

5.0

Niteesha Nagowah

We had an incredible experience working with Saroj from Broc Finance. He is incredibly knowledgeable, responsive, and guided us through the purchase of our company vehicle with expertise. The attention to detail and commitment to finding the best possible options truly set him apart. Highly recommend his services for anyone navigating the complexities of obtaining a finance. Thank you again for outstanding assistance.

Manpreet Kaur

Our sincere thanks to Saroj ji & his team for their invaluable assistance in securing the loan. We are extremely greatful for his exceptional service & support throughout the process. Highly recommend!

Matthew

Broc Finance were awesome…really responsive and solutions focussed. We especially appreciated having a broker who was an advocate for our interests when engaging with lenders.

Ibrahim Alpay

Saroj and his team is amazing have been using him for business funding for over a year he has found surprising solutions when others couldn’t make it happen very skill full with negotiating high loan amounts that I would never expect at wonderful terms and rates look no further I recommend broc finance for your business lending purposes look no further and don’t think twice much appreciated won’t go to any other broker at all many thanks to his team !!!!!!

vishal srivastava

We have used Broc Finance over last 2 years for various business line of credits and vehicle loan. Broc finance have been very professional in this journey. They have understood our needs as business and catered the solutions as per requirement . They look around in market and get one the best financial solution for the business be at vehicle of line of credits . I would strongly recommend the business for there services

Nasir sabiry

Thank you very much in helping me with financing a car SAS. You have been very professional and responsive every time I needed information. Fully recommend to any looking to finance a car.

Tajinder Kumar

For those seeking a trustworthy and dependable financial broker, I would like to recommend Broc Finance. While their fees may be slightly higher compared to other brokers, I found that their personalized approach made it worth it. Broc Finance took the time to understand my specific needs and goals and tailored their services accordingly. Additionally, their prompt availability to answer any questions or concerns was greatly appreciated. Overall, if you're in search of comprehensive and professional financial advice, Broc Finance is an excellent option to consider.

Ajay Kanumuri

I would strongly recommend. Saroj Shah helped to get my loan with in span of three days. He was very supportive and clearly explained the loan process.

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Frequently asked questions

Businesses in retail, manufacturing, distribution, and wholesale sectors often benefit from residual stock finance. Any company with significant amounts of unsold inventory can potentially use this financing method to improve cash flow and liquidity.

How is the inventory valued in residual stock finance?

[Answer]

Lenders typically use a combination of methods to value inventory, including:

Market Value: Current selling price of the inventory.
Cost Value: Original cost of acquiring the inventory.
Liquidation Value: Expected value if the inventory were to be sold quickly, often at a discount

The time frame varies by lender but can range from a few days to a couple of weeks, depending on the complexity of the inventory assessment and the company's financial situation.

Yes, residual stock finance can often be used in conjunction with other financing methods such as traditional loans, lines of credit, and invoice financing to provide a comprehensive solution to a company's cash flow needs.