Buying the workshop

Mae had spent eight years building a joinery business in rented premises, and the lease was coming up for renewal. A workshop nearby offered better access for deliveries and enough floor space to bring more of the production in-house instead of subcontracting it out. Buying made sense for where she wanted the business to be in ten years.

The problem was the deposit. A joinery carries real working capital: timber and hardware bought ahead of jobs, wages every fortnight, and deposits paid out on orders that will not invoice for months. Putting every spare dollar into a building and then running the workshop on an empty account is how a good purchase turns into a bad year.

We worked with Mae and her accountant to understand what the business actually earned, what it was already committed to, and what it would need in the account after the move. That last number is the one most deposit conversations skip, and it is the one that decides whether a purchase is survivable.

The application brought together two years of financials, the proposed purchase, where the deposit was coming from, and a realistic forecast of occupancy costs once the business owned the building rather than rented it. We compared the commercial lenders whose appetite suited the property type and the trade, explained what each wanted by way of security and repayments, and set the valuation and finance milestones against the purchase timetable so nothing ran late.

Mae could see the whole commitment, in writing, before she was obliged to proceed.

The $1.05 million loan settled against the $1.5 million purchase and the business moved into its own workshop. Mae contributed $450,000 towards the price and funded the purchase costs separately, which kept the two decisions clean.

The cash reserve stayed where it was meant to be: available for the move itself and for normal trading on the other side of it. Rent stopped leaving the business. That is one borrower's outcome on one deal, not a pattern anyone should expect to repeat.

The deposit is not the only number that matters when a business buys its premises. What the business holds afterwards matters at least as much, and a lender will take the question seriously if the file answers it before being asked. Work out what the business needs in the account first, then size the deal around it.