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My Super To Buy A Business?

Can I Use My Super To Buy A Business?

Super here means superannuation or the total savings one has made such that it can be invested in property, banks or buying a business for getting additional returns on the amount saved. But here, the question arises of buying an existing business, to which the answer lies below:

  • Can I use my super to buy a business?

The answer to this question is yes, an individual can use their superannuation funds buying a business and run it to gain additional and extra gains over their super. Research reads that women aged over sixty-five, have been reported to invest almost 65% of their super out of their pension funds and enjoying their passion and running their households at the same time.

Hence, it is quite possible for buying a business using one’s super and live their passion at the same time.

  • What is the SMSF?

SMSF stands for the self-managed super fund. The SMSF in the aspect of buying a business and being a proprietor or owner is that not paying a lease or rent to anyone for using of the space for the business, space can be residential or a property for business purposes or even commercial.

If the super is inadequate, getting a loan from a bank or financial organization is also possible through the business plan and other possible business documents.

A certain guideline in the aspect of purchasing a commercial space for the business through the SMSF, there should be a cash deposit of 35-40% above the price of purchase of the commercial space. Further, a particular lease termed as market lease shall be paid on a commercial basis, if the particular space is leased from a third party.

Hence, having a SMSF in terms of running a business is more beneficiary than leasing out yet another property for the same.

  • How much can I borrow?

Banks come into the picture when borrowing enters the stage. Banks shall evaluate the credibility of the business, the sale forecasts, the business structure, forecasts, the turnover, profits and so on. For the same, balance sheet, cash flow statements, profit and loss statements, and the individual’s documents stating prior experience of running a business, equity forecasts, personal assets and liabilities needs to be stated to the banker or bank evaluator for drawing a healthy and steady borrowing for the business.

Generally, sixty percent of the value of the business is the maximum that banks shall disburse, when all the documents regarding the proprietor and business are sound. For additional borrowing, private finance organisations shall provide funding, but with a higher rate of interests.

As also, mortgaging one’s commercial or residential properties can also be a part of borrowing if the above two options do not provide with sufficient funds.

Unsecured loans, have been recently established in Australia, and generally provide funding at a higher rate of interest than the banks.

  • What kind of business can I invest in?

The Australian economy provides a special business visa to nationals who do not belong to the country but are willing to do trade and business in the continent.

A sectoral research shows that the following sectors can be profitable enough for investment in the country:

  1. The country’s gross development majorly comprises of the service sector, hence, telecom, textile, property rental sites, etc. can become a profitable business proposition for the businessman entering into the market for making a profit.
  2. A small portion of the GDP also contribute to mining, hence, a business into trading of oil and gas from the Australian reserves can also turn profitable subject to an allowance from the Australian government.
  3. Travel and tourism promoting the national parks and conservation areas can also form a very profitable proposition for an entrepreneur to invest in the economy.
  4. Cafés and restaurant promoting various cuisines can also prove to be profitable for investment as languages such a Mandarin, Italian, Arabic, Greek and several are spoken in the continent. Along with this catering also is a wide area which can turn profitable for a certain sort of cuisine.
  5. Apart from these, online businesses can also be run in the continent with a small capital intake.
  6. Shops and stores providing groceries, antiques, gifts or any other handmade items can also prove profitable in the market, provided the competition available in the certain locality, one thinks of starting it in.
  7. Education and tutoring are yet one more option to explore as education becomes prime when it comes to a particular economy and its development, tutoring centres or an agency providing home tutors as well as online learning can become profitable.

Several other options may include event planning, digital media houses, and livestock farming.

Can I Use My Super To Buy A Business? was last modified: May 22nd, 2018 by Tammy Richards

Author:

Entrepreneur, writer, and marketing expert. Would like to share my experience and knowledge with Australian business owners, especially small businesses, and new starters.

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