Should businesses offset and save more?
Offset accounts are a very popular addition to home loans; a large proportion of visitors who compare home loans on CANSTAR′s database look for loans with an offset account.
Offset facilities can also provide a distinct advantage for business owners because – if your running cash balance is high enough – they can shave countless dollars and years off the life of the loan. In simplistic terms this facility works by offsetting your deposit account balance against your total business loan balance.
Say, for instance, you have a $200,000 loan and $15,000 in your offset account. Because of your offset account, you will only be charged interest against $185,000.
Of the 48 term loan products assessed by CANSTAR, 14, at time of writing, offer offset facilities.
These products are:
100% Offset Account Linked
|AMP Bank||Classic Variable Rate||Yes|
|ANZ||Bus Mortgage Loan Var||Yes|
|ANZ||Business Ln Var (Unsec)||Yes|
|bcu||Business Flexi Rate||Yes|
|bcu||Business Loan Base Rate||Yes|
|bcu||Business Loan Unsecured||Yes|
|bcu||Business Premier Rate||Yes|
|Commonwealth Bank||BBL Var Non-Res Secured||No|
|Commonwealth Bank||BBL Var Res Secured||No|
|Suncorp Bank||Business Essentials- Commercial sec||Yes|
|Suncorp Bank||Business Essentials-Residential sec||Yes|
|Westpac||Business One Ln -Bus||Yes|
|Westpac||Business One Ln -Com||Yes|
|Westpac||Business One Ln -Res||Yes|
Source: canstar.com.au database. Correct as at 7/5/15.
Overall, it goes without saying that it is in your best interests to regularly review your banking products, as both your commercial needs and the available products continually change. Reducing your small business banking costs can potentially save your business thousands.