Complex Lending Assessment Assignment Sample

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Effects of Government Policies on Businesses

Contents

Introduction:

Design Broking option to maximize the Client’s Outcomes.

Key Assumptions for the Plan.

Analysis of Research.

Plan Integrity with Compliance.

Impacts.

Impact of Taxation.

Impact of Social Security.

Economic and Government policies.

Industrial regulation and Code of Practice.

Financial Advisor and its Role.

Situation where the client should need the financial advisor:

Broking Options, financial markets, and investment characteristics.

Sales and Marketing Methodologies.

Feedback.

Implementation of complex loan structure.

Audit Trails.

Effective and appropriate follow up.

References.

Introduction to Complex Lending Assessment

Many of the businesses and many of the individuals are required to refinance itself for the purpose of expansion or future benefits because they are concerned with future difficulties. There are two methods to finance a certain project or undertaking. 1^st is to use the reserve or the savings and the second one to borrow if the savings or reserves are not enough. The assessment will cover the legal and financial aspects of borrowings in detail. To proceed with the assessment, the option is one selected because it generated the cash flow over a period of 20 years and can be enjoyed high capital gain after the period. Deep aspects will be covered in the assessment.

Design Broking Option to Maximize the Client’s Outcomes

The client wants to purchase a home that he wants to rent so that he can get some money for living, and almost after twenty years, he can sell this house and can get paid after retirement. These are some broking options that can help the clients to maximize their outcomes. The broker has a better understanding of the client’s financial acumen; therefore, he should provide a suitable way for purchasing the home in which the client can pay a reasonable amount according to his income and capacity of the loan. The broker should use all his experience and analyze the possible risks such as government law, policies, and environmental changes that may occur during the implementation of planning. He should provide a suitable solution to overcome these risks so that the outcome of the client will remain high if any of the risks affect the plan of the client.

Key Assumptions for the Plan

The assumption of this plan is based on the purchasing of a home and construct it in three freestanding dwellings. The client assumes that the house will provide the rent approximately 450$ for each apartment per month for 20 years, and after that, he will sell the house. The main assumption in this plan is that there are no direct and indirect factors that will be damage the benefit of the plan. The estimated contract purchase price is about $500,000, and the clearance of the site will require approximately $50,000, and the subdivision cost will be $25,000. The estimated cost for the completion of each property will be $400,000, and the estimated time for completion will be six months. All these assumptions are developed by estimated all possible risks.

Analysis of Research

When a person applies for a loan through the commercial banking system, these are some condition which he can meet and show during the loan application in Australia. According to the Loan Act 1930, these are some important things which the borrower has to show: the total amount of assets, the income of the borrower and the liabilities, credit history, and many other things (Federal Register of Legislation, 2020). According to the given scenario, the cash on hand for the company is increasing each year, such as $21,985, $21,544, and $28,278. The total liabilities of the client’s company for the last three years are $87,498, $75,375, and $65,979. The finding of the data shows that the cash on hand of the company is increasing each year, and the total liabilities of the company are decreasing. It means the company is able enough to pay the liabilities due to the higher profit, and the company can pay the loan after paying all the expenses of the company.

Plan Integrity with Compliance

It is important to note that the execution of the plan based on the type of loan which the clients borrow from the commercial bank. According to the loan ac 1930 Australia, there are many types of home loans, and any clients can get the loan according to their needs. Here two loans are mentioned for the clients, and they both have some pros and cons, so it up to the clients which one he selects for the loan. The first one is a fixed interest rate loan, and the second one is a variable interest rate loan.

In the fixed interest rate, the client has to pay the fixed interest rate over the loan for the complete duration of the loan. The main advantage of this type of loan is that the clients have no concerned about the fluctuation in the interest rate and will pay according to the settlement. The main disadvantage of this type of loan is that if the economy of the country will be better and the interest rate will be reduced by the Australian government, then the client has to pay the fixed amount. The other type is a variable loan. In this type, the commercial bank receives the loan with a variable interest rate. The advantage is that the client may pay a lower interest rate, and the disadvantage of this type loan is that may the client’s business is a collapse in the future, and he will not aware that how much interest he will pay (Mortgage Choice, 2020).

Impacts

These are some major impact which may affect the client’s investment and the financial requirements.

Impact of Taxation

These are some business taxes according to the Australian Taxation Law: capital gains tax, goods, and services tax, company tax, and payroll tax. Although these taxes are fixed by the Australian government, the change in the law may impact the taxation of the client company; this impact will be minor and will not the company’s profit. Therefore, the client can pay the loan if the taxation policies may change in the future (Unimelb, 2020).

Impact of Social Security

According to the Social Security Act 1991, the government of Australia has to provide the pension loan to the aged citizen who is eligible so that they can improve their income in retirement. Therefore, social security will provide a positive edge to the client’s investment so that he can pay the loan even in the old age (Federal Register of Legislation, 2020).

Economic and Government Policies

The change in the government policies for the loan and the other business policies may impact the client's business and its investment. The major for changing in government law and policies for the loan and businesses are due to economic growth. Therefore, there is a risk in the future due to the change in policies and government law. The client must control these risks so that he can pay the loan in time (Williams, 2019).

Industrial Regulation and Code of Practice

In Australia, there are numerous laws for industrial regulation and code of practice, such as Australian Business and Environment laws, Australian import and export law, Workplace Relation Act 1996, and Workplace Relations Regulation 2006. The code of practice in the fair work act 2009 is very important. These are laws helps out the clients to deploy better industrial regulation within the company so that the company will work according to the laws and the fair work act 2009 will provide the guideline to the employees of the client's company to work effectively by determining their major and minor responsibilities (Federal Register of Legislation, 2020). The deployment of these laws within the company helps out the clients to leads their business on success, and he can get and pay the loan in time.

Financial Advisor and its Role

The financial advisor is one who is well experienced in his field and can access the financial need of an individual by using his experience and can provide the guideline to the clients in an investment decision, tax laws, and in the insurance decision. He helps the clients in the planning of the short and long term in an effective way. According to the given scenario, the clients must need to meet a professional financial advisor because he wants to get a loan from the bank, and the financial advisor will provide him a suitable way. These are some other roles and responsibilities of the financial advisor (Betterteam, 2020).

He arranges a meeting with the clients and listens to its requirement. He provides the client with a suitable solution according to his requirement. He answers all the quarries of the clients about the investment and loan and its potential risk. He provides a better solution by using all his experience. Therefore, it is necessary for the client according to the given case that he must concern a financial advisor before taking any step for a loan.

Situation Where the Client Should Need the Financial Advisor

There will be a need for professional financial planners in certain situations. This person shall be authorized by the organization and have the advisor license of ASIC. Following are the situation where the clients need financial advice

• Interviews for the loans needed to be held during the business hours and mostly takes a long time. The loan is based on the interviews, so there will be a need of the financial experts in those situations that can explain the methods of repayment and can ensure the financial stability of the person and its business.
• The client is needed to analyze the statements, data, legal requirements, and other factors so that it can claim for the proceeding for the loan. Moreover, the client is needed to analyze the data that he or she has provided for the application of the loan. For the analysis, there will be the need of the professional

A statement of advice from the financial planner or the written advice of the professional is required from RG146 accredited planner or advisor. This statement will be able to clear the appropriate strategy of SMSF regarding the purchase of the property or not and rather to invest or not.

Broking Options, Financial Markets, and Investment Characteristics

The broker options will be assessed on the basis of the performance criteria. Following are the points of assessing the broker options:

• The identification of correct complex needs of the client
• Research and consider solution related to the field of broking based on the needs of the client
• For the review of the client, gather and select appropriate information

The financial market will be assessed on the basis of the target audience, qualification, description, and objectives (IMF , 2019). The investment shall be made in the area of the property for the purpose of the rental income and capital appreciation.

Sales and Marketing Methodologies

There will be a need to disclose the marketing and sales strategies for the improvement of revenue. The followings are the main points of the methodologies that can peruse the financial Institution.

• For the acceptance of the lender, the sales and marketing strategies will be based on the positive growth that will be based on the actual trends and data. It will include the complete cost and benefit analysis.
• The planned document contains the sunset data of the period of about three years, which is more than six months. This data will be enough for analyzing trends and the capability of repayment.
• The methodologies will be conducted in a way that price will be more than 95% of the valued price.
• In the methodology, it has been undertaken that none of the policy will be canceled or amended without the consent of the lender (Training.gov.au, 2019)

Feedback

The client will be provided with all of the information regarding the plan and agreement. The client will be exposed to interact with a planner or independent personality having knowledge so that it may have complete information. After that, the consent and feedback of the client will be taken and will be proceeded according to the consent. My duty will be to work in order to gain maximum possible benefit to the client.

Implementation of Complex Loan Structure

Following are materials for the effective implementation of complex loan structure:

• Implementation actions will be devised with the consent of the client, and all the actions will be organized.
• After preparing the summary of the actions for implementation, there will be a need for the execution. So the execution plan will be devised
• Actions and plans will be undertaken (Australian Government , 2012 )

The personnel that has the authority to implement the proceedings are as follows:

• Banks
• Financial advisors
• Any person having the required skills and knowledge

Audit Trails

It has been declared that the loan is for the investment in real estate property, and generated cash flow will be used to compensate the amount of loan before arriving any benefit from them. The investment will generate a static cash flow of about 16200 dollars per annum for the life of about 20 years. Further, the increasing profit will be helpful to manage the repayment of the loan as the investment will be made on the name of the business, and the business will undertake the repayment of the loan.

The repayment of the loan for the business can be estimated on the basis of its financial condition and financial management. The financial ratios will be helpful in the determination of the performance of the business in the area of life. Following are the financial ratios that can be helpful for measuring the ability:

Ratio	Formula	20XX
Current Ratio	Current assets / current liabilities	1.47
Quick Ratio	(Current asset – inventory) / Current Liabilities	1.31
Debt to Equity Ratio	Total debts / total equity	0.54

The current and the quick ratios are greater than one which indicates the strong position of the business. The strong liquidity position reveals that the business has enough assets that it can satisfy the liabilities for the period. The debt to equity ratio indicates the company has fewer liabilities than the equity, and the business is relying on the reserves rather than the borrowings. The ratio will have a positive impact on acquiring the loan.

SWOT analysis of the business will be helpful to reveal that threats and opportunities of the company so that it may be elaborate future coming business threats that can affect the payment capability of loan for the business. The strength of the business is that the sales team of the business is performing well to enhance the sale of the business. Alternatively, the sale of the business can enhance the profits and reserves and generate a higher amount for the repayment. The weakness of the business is that it has no strategy to low the costs (Gürel & Tat, 2017). The opportunity of the business is that it is a long-established business, and it has gained the trust of the customers. Threats are related to continuously changing market environments and economic conditions.

Effective and Appropriate Follow Up

There is a need to develop a certain system for the feedback, so the progress of the acquisition of loans shall be evaluated. This system will evaluate the performance regarding steps of loan, from legal to financial and another relative process. In the case of any mismanagement, the related matter will have appeared can be solved at the time. Further, the feedback of the client related to the processes will be helpful for the fluency of management.

References for Complex Lending Assessment

Australian Government . (2012 ). FNSFMB504A Implement complex loan. Retrieved from https://training.gov.au/TrainingComponentFiles/FNS10/FNSFMB504A_R1.pdf

Betterteam. (2020). Financial Advisor Job Description. Retrieved from Betterteam: https://www.betterteam.com/financial-advisor-job-description

Federal Register of Legislation. (2020). Fair Work Act 2009. Retrieved from Federal Register of Legislation: https://www.legislation.gov.au/Details/C2020C00153

Federal Register of Legislation. (2020). Loan Act 1930. Retrieved from Federal Register of Legislation: https://www.legislation.gov.au/Details/C1930A00054

Federal Register of Legislation. (2020). Social Security (Pension Loans Scheme—Rate of Compound Interest) Determination 2018. Retrieved from Federal Register of Legislation: https://www.legislation.gov.au/Details/F2018L01632/Explanatory%20Statement/Text#:~:text=The%20Determination%20engages%20the%20right,estate%20from%20the%20Australian%20Government.

Gürel, E., & Tat, M. (2017). SWOT analysis: a theoretical review. Journal of International Social Research.

IMF . (2019). TRAINING CATALOG SESSION DETAILS. Retrieved from IMF : https://www.imf.org/en/Capacity-Development/Training/ICDTC/Schedule/OL/2019/FMAxOL19-111

Mortgage Choice. (2020). Fixed and variable rate home loans. Retrieved from Mortgage Choice: https://www.mortgagechoice.com.au/home-loans/loan-types/fixed-vs-variable-home-loan/

Training.gov.au. (2019). FNSFMB502 - Identify and develop broking options for clients with complex needs. Retrieved from https://training.gov.au/Training/Details/FNSFMB502: https://training.gov.au/Training/Details/FNSFMB502

Unimelb. (2020). Australian Taxation Law: Starting your research - introductory tools. Retrieved from Unimelb: https://unimelb.libguides.com/australian_taxation_law#:~:text=Section%2051(ii)%20of%20the,collection%20and%20administration%20of%20taxes.&text=However%2C%20since%201942%20only%20the,revenue%20for%20the%20Commonwealth%20Government.

Williams, F. (2019). The Effects of Government Policies on Businesses. Retrieved from smallbusiness.chron: https://smallbusiness.chron.com/effects-government-policies-businesses-65214.html

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