AGS
Level 4, 183 Wickham Terrace Brisbane QLD 4001
(1800) 217 217 Free case consultation
Level 4, 183 Wickham Terrace Brisbane QLD 4001
(1800) 217 217 Free case consultation

BREAKING NEWS: Vendor Finance Contracts are NOT illegal

BREAKING NEWS: Vendor Finance Contracts are NOT illegal

BREAKING NEWS: Vendor Finance Contracts are NOT illegal

That’s correct… Vendor Finance Contracts are NOT illegal. If you haven’t done so already, take a look at our previous article What is Vendor Finance and Is It Worth It?”.

With obtaining finance from banks and other traditional lenders becoming increasingly more difficult to obtain, we are receiving a growing number of inquiries about vendor finance.

The most common comment clients make when enquiring about vendor finance is that they have spoken to their regular solicitor and they have said this type of transaction is illegal. This comment generally stems from a lack of knowledge and understanding of vendor finance and the fact that these types of transactions are not commonplace in Queensland. However, these types of transactions are in fact legal and here at Aylward Game Solicitors we have been successfully drafting and producing vendor finance contracts for Buyers and Sellers for more than 20 years.  

What is Vendor Finance?

Vendor Finance Contracts are NOT IllegalVendor finance is a form of lending in which a company lends money to be used by the borrower to buy the vendor’s products or property. Vendor finance is usually in the form of deferred loans from, or shares subscribed by, the vendor. The vendor often takes shares in the borrowing company. This category of finance is generally used where the vendor’s expectation of the value of the business is higher than that of the borrower’s bankers, and usually at a higher interest rate than would be offered elsewhere.

Vendor finance bridges the valuation gap due to the time value of money. If the buyer of a business doesn’t have to repay the vendor for the vendor loan for a few years, then the value of that portion of the purchase price is worthless. In some cases there is an interest charge on vendor loan, but in other cases it is simply a deferred payment. Vendor finance is different from an Earnout because it is not contingent on performance. Since there is no contingency, vendor finance is more risky for the buyer than an earn-out.

Vendor finance can also be used when the buyer does not have the funds to purchase the entire business. In this case the vendor creates a loan with an interest charge to help the buyer complete the purchase and help the seller complete the sale, usually on better terms for the seller. Source: Wikipedia

Don’t forget to DOWNLOAD OUR EBOOK on vendor finance.

If you are considering a vendor finance arrangement the best decision you can make is to talk with an experienced vendor finance lawyer who fully understands the risks and rewards of this type of transaction.

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El Ka
El Ka

2 months ago

Mark Kenney was great to work with during a recent property purchase. There were some complications to iron out along the way and he addressed them really proficiently and communicated well throughout. They are in a gorgeous historic building near the CBD with easy free parking out the back. (I'm not sure if there is wheelchair/lift access to their office, please check on that first if that is important to you.)

Jackson Elliott
Jackson Elliott

9 months ago

IAN FIELD is awesome at staying on top of things. All are very professional, kind, knowledgeable, and I've had nothing but pleasant experiences with this firm. I have recommended them to others and will continue to recommend their services. thanks

Mana S
Mana S

6 months ago

Worked with Mr Ian Field and Mrs Elise Foote as our mediators. Very disappointed with the service. The process lasted way more than expected and obviously we were charged much more than estimated. The delay caused much more stress rather than helping us to resolve the problem and they didn’t seem to feel responsible enough to care about it. They had many mistakes that we had to correct them which shows they didn’t spend enough time on it and even part of the job remained kind of unresolved and they kind of left me alone without caring about it. I would not recommend them at lest in family matter.

Anita Loader
Anita Loader

8 months ago

I wanted to pass on my thanks to all at Aylward Game, especially Mark Kenny, Shonae Morrison and Allyce Ardern, for all the assistance they have given over the past 6 weeks. As a very novice property purchaser, the professionalism, advice, hand holding, responsiveness and above all patience were so very much appreciated and made what could have been a very stressful time, a very easy process (well, for me at least, maybe not for them!) Who knows, if this venture goes well, it may not be the last they hear of me.... Apologies in advance! 😳

Lawrence Carneal
Lawrence Carneal

a year ago

Not many firms can compete with the skill and performance that Aylward Game have - I am a very happy camper... fast turn around and diligent research on my property matter thanks to Mark Game.

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