Complex Lending Assessment

Assessment cover sheet

In order for your assessment to be marked you must complete and upload all tasks and this cover sheet via the AAMC Training Group portal. Your assessment tasks must be uploaded in an electronic format i.e. Word, Excel, PDF or Scan. A maximum of five (5) attachments (maximum 20MB each) can be uploaded for this assessment. Please see the step-by-step instructions in your Member Area on how to upload assessments.

Student details
Course name		Diploma of Finance and Mortgage Broking Management
Assessment name		Complex Lending Assessment
Surname	Khatter		Given name
Address	Postcode	3029
Email
Phone	Phone (other)
Current occupation
Industry	Utilities		Years in industry	12 years

When you upload your assessment you will be asked to confirm that your assessment submission to AAMC Training is your own work and NOT the result of plagiarism or excessive collaboration, and that all material used from any third party has been identified and referenced appropriately. AAMC Training may conduct independent evaluation checks and contact your supervisor to discuss your assessment.

Checklist of attachments:

☐ Case Study Submission Part 1 and supporting documentation
☐ Case Study Submission Part 2 and supporting documentation

Please indicate style of course undertaken:

☐ Correspondence ☐ Online ☐ Face to face – Trainer’s name:

Once your assessment has been uploaded it will be pending review with your nominated course assessor and marked within 5-10 working days. You will receive an email advising you have been marked as “satisfactory” or “additional information required”.

If you have queries relating specifically to your assessment please log an ‘Assessment Query’ under the HELP tab on your Members Area dashboard and a Student Support officer will respond. Alternatively, if you have an administration query please go to ‘Admin Query’. For example: I am having trouble with uploading my assessments and require assistance – can you please help me with this?

CREDIT TRANSFER

You may be able to claim credit transfer for a unit/s of competency that you have previously completed with AAMC Training or another RTO. If you have been awarded a record of result or statement of attainment for any of the units detailed below then please go to the Credit Transfer tab in your Learning Centre and follow the prompts.

This assessment relates to the following units of competency:

· FNSFMB502 Identify and develop complex broking options for client

· FNSFMB503 Present broking options to client with complex needs

· FNSFMB504 Implement complex loan structures

Please refer to AAMC Training’s full Recognition Policy for further details.

Please note articles and resources used in questions below are for the purpose of training only and may be outdated but still acceptable to meet the requirements of the tasks.

In addition to fully reading and understanding the contents of the Learner Guide, you may also need to access some of the forms and templates in the Useful Resources section of your Members Area.

Your answers to the task questions are to be typed into this document and uploaded.
No assessment word count has been specified, although you are expected to provide good quality answers to each of the questions.
At the time of going to print the web links in this document were current. If you find a broken link please research yourself and advise AAMC Training of the issue.
Although some general discussion between students covering the assessment is allowed your responses to each of the questions must be an individual effort.
PLEASE NOTE: AAMC Training only wants to see your own work. Please do not upload parts of the learning guide or instructions on how to complete. When this extra information is uploaded it presents unnecessary work for the assessors and in turn delays our assessment responses.

As you are aware, our learning centre allows for 5 uploads per assessment (max 20MB per file). There are many attachments required for this assessment, you may wish to embed documents as a way of minimising document uploads. Please see instructions on how to do this if you are not familiar with this practice.

CASE STUDY Overview

In order to achieve competence, you will need to demonstrate a clear understanding of complex loan scenarios, proving you are competent at Diploma level. This case study will determine your understanding of the complexities of various loan scenarios and the outcome for your clients.

The requirements for this case study is to prepare a submission for assessment in two parts.

Submission Part 1 – Fully completed set of NCCP Act Compliance documents including related interview and diary notes.
Submission Part 2 – Fully completed loan submission to the lender/s of your clients’ choice. Please also note at this stage we have options for you to choose given the industry area you are currently servicing e.g. Investment property loan, Commercial/Business Loan, Self-Managed Superfund Loan or a Plant and Equipment loan. You make the choice but all required documents (no matter what industry you select) must be enclosed.

Please ensure the following documents and processes are included in your client and loan submissions in the following order:

Submission Part 1

A completed Client Needs Review/Fact Find form which has allowed you to review and research your client’s information.
A client signed Privacy Consent form to exchange personal information with other third parties. Because of the variances in the make-up of a number of the compliance forms used by the industry, this authority may already be included in the Credit Guide or other such compliance documents. At the end of the day, they all have the same meaning and intent.

A completed Statement of Credit Advice or a Credit Quote or a Credit Proposal Disclosure Document which you have presented to your clients’ with the recommendation of a lender. Your recommendation will in all probability provide the solution the clients are seeking. It should be in the appropriate format that the clients will easily understand. This document also serves as your authority to proceed with the lodgement of the loan application.

Complete Preliminary Assessment Checklist
Completed Credit Quote
Provide a completed Compliance Checklist
You must be satisfied that you have outlined the process that is required for the client to obtain appropriate finance and the risks (potential and real) of which your client should be aware.

Submission Part 2

A completed AAMC Training Assessment Cover Sheet in which you acknowledge the submission is all your own work.

A fully completed loan application which will contain all documentary financial evidence to support the application such as:

Financial Statements, Tax Returns, Trust deeds etc.
Cash Flow Forecasts
Offer and Acceptance or Contract of Sale for any purchase of real estate/ Invoice or Offer to Purchase from a supplier for Plant and Equipment
Evidence of any other debt your clients may have which allows a serviceability to be completed with all available facts.
A Serviceability Assessment to show clients can afford the loan requested.
Notes to the lender addressing the points as listed in line with the course notes titled lenders submission lender notes, for example:
- Applicants’ details including history and needs
- Purpose of loan
- Brief details and value of security
- Brief details of loan make-up
- Loan amount requirement
A SWOT analysis – refer to appendices for template of this document, you should also refer the results of your analysis in your notes to the lender.
A Financial Ratio Analysis – A minimum of one or more if appropriate to be completed and the results mitigated/supported in your notes to the lender
Reasons for major variations in the 2 years financial statements included in this assessment.

PLEASE NOTE: The SWOT and Financial Ratio analyses along with the reasons for variances will have to be submitted to AAMC Training as attachments that would normally be provided in the Notes to the Lender.

What we are asking for here is an application that you would send to the lender. Whilst you would not normally include in your submitted lenders file the Clients Needs Review/Fact Find, Statement of Credit Advice/Client credit quote you need to maintain them on the clients file for audit purposes and we need to verify them for assessment purpose.

Evidence requirements

In order to be deemed competent, you will need to evidence the ability to:

Develop detailed broking options designed to maximise the client’s outcomes and reach client objectives which incorporate elements from research and which address complex needs and issues
Identify and describe key assumptions upon which the plan is based
Provide a detailed analysis of research strategies and findings
Test and make appropriate checks on a proposed plan for its integrity and compliance
Assess the impacts of taxation, social security, economic and other government policies on client investment and financial requirements taking care not to provide financial advice unless licensed to do so
Interpret and comply with industry regulations and codes of practice
Identify the roles of associated financial advisers and work effectively with them
Identify and document the situations where the client/s should be referred to an associated financial advisor for professional advice
Assess broking options, financial markets and investment characteristics
Use appropriate sales and marketing methodologies and provide justification and research evidence
Gain client feedback on and/or agreement to the plan
Prepare materials and personnel to effectively implement complex loan structures
Establish appropriate audit trails and effectively document records, diary notes and data
Demonstrate that effective and appropriate follow up and feedback systems are in place to track progress of the loan application and to keep client/s informed

Knowledge requirements

To be deemed competent you must be able to demonstrate a comprehensive knowledge of:

Acts and regulations affecting the financial industry
Legislation impacting on financial services, including environmental, corporations and consumer legislation and State and Territory legislation, charges and taxes
Relevant codes of practice
NCCP Act disclosure requirements
The role of mortgage/finance brokers
Products available in the financial services industry
Sources of information on financing such as lenders, government departments, accountants, solicitors and financial planners
Methods of presenting financial data
Credit assessment
Risk Assessment
Valuation practices and methodology.

Preamble

The task is presented in the form of a case study around a complex Residential, Commercial, SMSF or Plant and Equipment lending scenario. It is your choice as to which loan option you select as a case study, provided however your submission meets the structured process we are seeking from you.
Whilst the traditional finance broker will look at the options via the traditional pathways of commercial and or investment property, please understand that (given Australia now ranks second in litigious actions) it would be wise to fully understand the client’s overall personal situation before making recommendations. It may even be more beneficial for the clients to place this transaction via their Self Managed Superannuation fund as that may produce a more tax effective solution for the client. Remember if you are not authorised to give advice in this area refer the client to one of your strategic advisors who is. AAMC Training provides qualification courses in this area.
Please ensure that you assess applicable fees and charges in line with requirements of the State/Territory in which you operate
The majority information to complete the case study is included in the scenarios provided or within the Learning Guide
Some information has been deliberately excluded and you will be required to identify and document these items. This Case Study has been designed so that it can be written as a complex property investment loan, a self-managed superannuation loan, a business loan or plant and equipment loan. It is up to the individual to determine which type is best for the client.
It is recommended that you use your own NCCP Act document templates to complete Submission Part 1
If you do not have access to these documents you can login to download sample templates from the AAMC Members’ area at aamctraining.edu.au under the Useful Resources – Forms, Documents & Templates tab. There are a number of other forms available.

INTERVIEW NOTES

CAST OF CHARACTERS

The People

Jason and Rebecca White Husband and wife (Please refer to Personal Details Sheet)

Sara and Mark Dependant children (ages 10 and 8)

The Entities

Glossy White Pty Ltd Trading Company for Painting

Owns Registered Business Name “Glossy White Painting”
Directors: Jason and Rebecca White

Shareholders: Jason and Rebecca White (equal)

Employees: Jason and Rebecca White, Martin Kelly (apprentice)

Shades of Whites Pty Ltd
as trustee for
White Unit Trust Trading entity for Interior Design

Owns Registered Business Name “Shades of White”

Unit holders: Jason White 50%

Rebecca White 50%

White Pty Ltd Non-trading “Special Purpose” company as trustee for

White Superannuation Fund (SMSF)

White Superannuation Fund SMSF
Beneficiaries Jason and Rebecca White

WHAT THEY TOLD YOU

Jason and Rebecca have been clients of yours since 2005. At that time, you assisted them with a home loan from St George Bank to purchase their current owner occupied home. Home loan balance is $360,000 and a recent real estate agent appraisal of their home, located at 7 Park Lane in a good suburb in your State/Territory, estimates the market value to be $1m. They are open to a refinance or restructure of this loan with their own bank or with any other lender if required.

Jason and Rebecca also have $257K each in their Self Managed Super Fund in cash.

Glossy White Paint has been operating since 2000. A couple of years ago Rebecca completed her interior design qualifications and Jason is a qualified painter.

The unit trust was set up by their accountant, who also provides a book-keeping service for them so that all the BAS and other accounting needs are met professionally.

They do not consult currently with a financial planner but they did say to you that their accountant has also been on to them about using the funds more effectively in their self managed superannuation fund. Their accountant is tied in with a Dealer Group and is also authorised to give advice in this area, hence his insistence on them discussing the $514K cash sitting in their SMSF. Rebecca mentions that referral for this type of service provided by a financial planner would be a good idea as a second opinion as well, plus they also need to sort out their insurances. She has asked for your recommendation of a suitable professional. Jason looks a little uncomfortable with this request. Your experience here tells you that you had better address his issues without delay, to avoid losing the referral to another Broker. You also know, from your experience in your role, that many Australians are under insured and many do not have wills in place. The clients are typical and express the opinion “Oh it won’t happen to us”. They do not want to admit their shortcomings in these two vitally important areas. Nor do they wish to admit the possibility of not earning an income, become ill or even worse die.

· Please note:

Courts in Australia deem Finance Brokers to be professional and as such under the Duty of Care have a legal obligation to advise clients of the ramifications of financial hardship caused through illness, accident or death.

Rebecca is concerned about how they will meet interest costs until homes are completed and rented. She has asked you for options in this area.

THE DEAL

Choose one of the case studies to present for assessment purposes. Please remember to follow the structured process we have set out in the course manual.

You should also note that the correct selection must be made to suit clients’ best interest, not what you feel is necessary in your comfort zone. So remember, unless you have some understanding of all the available options the clients will be or maybe disadvantaged and seek restitution from yourself sometime in the future. We will not penalise you for any selection you make, we are only seeking to assess your ability to prepare the loan application and applicable forms etc. to meet the required standards for the loan you have selected for your clients.

Option 1 - Can be structured as an investment property loan

Jason advises that they have located a derelict home on a large block of land in a nearby suburb that they would like to purchase with the aim of constructing three freestanding dwellings. These homes will be rented out upon completion. They hope to retain them for at least 20 years and then sell to help fund retirement or perhaps for the older kids to live in down the track. Their solicitor has advised that given block size it may be advisable to subdivide and for each home to have separate title. Property is a corner block.

A local real estate agent has stated that the rental returns would be slightly higher than suburb average, as the area is made up of much older homes. Capital growth could also be above average as the suburb is ideally placed for medium density development. Schools and shops are nearby. Transport infrastructure is a little lacking.

Property contract purchase price is $500,000.

The Builder’s tender is for a total of $600,000 and does not include demolition, site clearance or subdivision costs. Builder is licensed and reputable and project will be funded via progress payments. Separate quote provided for demolition and clearance of $50,000. Solicitor advises subdivision costs of approximately $25,000. Clients wish to borrow all of the project costs including lender, legal, government and any other charges and fees. Estimated completion date is in 6 months. Estimation is based on the completion valuation of $400,000 per property and rentals should be around $450 PW per unit.

Options 2 and 3 can be structured as either a commercial loan or a Self-Managed Superannuation Fund Loan

Clients are not sure which way they want to structure this loan and have come to you seeking your advice and guidance as they are now seeking to purchase stand-alone commercial premises to house their painting business and plant and equipment. They inspected a commercial property located at 3 John Street, your suburb which is the suburb next to where they live. Their children now need more space at the family home and hence they are seriously considering the need to move the business to either a rental property or look to purchase their own. They are keen to look at purchasing their own as they will also retain an asset that way. They will be paying rental in line with market value in that area which is relatively cheap for what they are getting at $700 per week. There will also be outgoings on the building of an estimated $5k a year.

They mention to you that their accountant has discussed setting up the Bear Trust if they wish to purchase commercial Property to house their business, if they choose to fund via through the SMSF vehicle.

Deal via Commercial or SMSF Borrowings

Purchase Price $750K made up of:

GST $75K

Loan app fee $7.5K

Stamp duty $41K

Valuation etc. $1.5K
Total $875K

LVR 70% $525K

Security Commercial Funding- Family Home and Commercial Property
or
Security SMSF Borrowings- Commercial Property and SMSF Funds

Option 4 - Can be structured as a plant and equipment loan using the following scenario:

Glossy White Pty Ltd recently won a contract to paint a large supermarket chain (inside and outside). The contract covers 30 stores throughout Victoria, NSW and Queensland. Internal work will need to be done of an evening when the stores are closed and it is expected to take two weeks per store using four painters and two hydraulic scissor lifts.

The contract is for $25,000 (excluding GST) per store and all work must be completed within 24 months. Half of the income will be paid on commencement of the work for each store and the balance on completion.

Jason has estimated he will need to employ a further three painters at a salary of $65,000 each and will also need to purchase two hydraulic scissor lifts with cage and trailer at a cost of $21,000 (including GST) each.

Clients have not yet spoken to Accountant however feel they would like to purchase the equipment in the Trust (White Unit Trust) and also rent the machines out when not in use at the end of the contract.

You are required to prepare a complex application, loan documents, provide all supporting documents (including invoices) and a cash flow showing repayments and all costs that can be covered from contract income.

THE DETAIL

Personal details:

Mr Jason White and Mrs Rebecca White
Date:	1^st December 20XX
Applicant 1:	Mr	Applicant 2:	Mrs
Surname:	White	Surname:	White
First Names	Jason	First Names	Rebecca
Date of Birth:	21/10/1973	Date of Birth:	26/01/1975
Drivers Licence	1234AB	Drivers Licence	4567CD
Address:	7 Park Lane, Suburb, State Postcode	Address:	7 Park Lane, Suburb, State Postcode
Time at address	6 years	Time at address	6 years
Phone: Home:	00 9385 0000	Phone: Home:	00 9385 0000
Mobile:	0417000000	Mobile:	0418000000
Business:	00 9835 0001	Business:	00 9835 0001
Fax	00 9835 0002	Fax	00 9835 0002
Email	jason@glossywhite.com.au	Email	bec@glossywhite.com.au
Occupation:	Painting Contractor	Occupation:	Interior Decorator
Time self employed	11 years	Time self employed	11 years
Dependents (ages)	2 (10 and 8)	2 ½ Years Shades of White
Gross Income Y/E 06/XX	$95,000	Gross Income Y/E 06/XX	$95,000

Asset values $	Liabilities amount owing $	Monthly payments $	Lender
Owner occupied residence	1,000,000	360,000	2,249	St George
Cash resources	125,000
Credit cards:
Limit $5,000 (swiped monthly) Jason	1,000	Nil	ANZ
Limit $10,000 (swiped monthly) Rebecca	3,000	Nil	St George
Furniture & personal effects	130,000
2009 Holden Commodore Jason	25,000
2010 Ford Focus Rebecca	15,000	10,000	300	ANZ
Vintage Motorbike Collection	80,000
White Superannuation Fund	514,000
Shares in Glossy White Pty Ltd	20,000
TOTALS	1,909,000	374,000	2,549

Glossy White Pty Ltd Trading as Glossy White Painting
ACN 12345678 / ABN 91 12345678
Profit and Loss Statement for the year ended 30 June 20XX

20XX $	20XW $
Income
Painting Income	522,665	616,508
Less Cost of Goods Sold
Purchases	51,187	83,075
Sub-Contractors	175,292	329,694
Plant Hire	598	614
Sub Total	227,077	413,383
Trading Profit	295,588	203,125
Interest Received	1,139	627
Gross Profit	296,727	203,752
Expenses
Accountancy	4,380	2,180
Advertising	1,958	5,108
Apprentice Wages	15,000
Bank fees and charges	222	201
Computer expenses	692	275
Depreciation – Plant and Equipment	1,245	937
Motor vehicles	8,031	9,894
Directors Salaries	190,000	150,000
Entertainment expenses	509
Filing fees	212	212
General expenses	369
Home office costs	1,473	1506
Insurance (business)	1,482	911
Insurance (workers comp)	8,726
Licence and Permits	200	76
Motor Vehicle expenses	3,801	6039
Postages	93	45
Printing & stationery	1	137
Repairs & maintenance	881
Staff amenities	390
Staff training	572
Subscriptions	192
Superannuation - Directors	19,000	15,000
Superannuation – Other	1350
Telephone	3494
Travelling expenses	70
Uniform Expenses	30	818
Total expenses	263,303	194,409
Net profit from ordinary activities before income tax	33,424	9,343

Glossy White Pty Ltd Trading as Glossy White Painting
ACN 12345678 / ABN 91 12345678
Balance Sheet as at 30 June 20XX

20XX $	20XW $	20XV $
CURRENT ASSETS
Cash assets
Cash at bank	8,258	6,524	11,965
ABC Bank Business Online Account	20,000	15,000	10,000
Cash on hand	20	20	20
Sub-total	28,278	21,544	21,985
Debtors	6,195	10,123	8,956
Stock	4,324	5,874	7,546
Sub-total	38,797	37,541	38,487
Fixed Assets
Plant and Equipment	50,109	58,434	63,191
2009 Toyota Hilux Van	30,000	35,000	40,000
2009 Toyota Hilux Ute	22,873	31,477	40,000
Sub-total	102,982	124,911	143,191
TOTAL ASSETS	141,779	162,452	181,678
CURRENT LIABILITIES
Hire Purchase liability	13,603	13,603	13,603
ATO liability	5,013	5,583	3,254
GST payable	7,643	3,315	4,164
Sub-total	26,259	22,501	21,021
NON CURRENT LIABILITIES
Hire purchase liability	39,270	52,874	66,477
Sub-total	39,720	52,874	66,477
TOTAL LIABILITIES	65,979	75,375	87,498
Share Capital	20,000	20,000	20,000
Retained Earnings	55,800	67,077	74,180
EQUITY	75,800	87,077	94,180

Financial statement explanations (1% Variance Rule)
Total Income (-93K)	Took family to Egypt for holidays in 20XX
Sub-contractors (-154K)	Reduced contractor work and replaced some with apprentice
Workers Comp Ins (+$8K)	Agreement made with subcontractors to cover premiums
Telephone (+$3.49K)	Treated as personal expense for some reason in 20XW
Fixed assets P & E (-$8.3K)	Progressive depreciation
Non-current liabilities HP (-$13.6K)	Natural reduction by way of monthly payments.

PLEASE DO NOT COPY THESE EXPLANATIONS AS YOU ARE REQUIRED TO INTERPRET THE EXPLANATIONS/COMMENTS IN YOUR OWN WORDS

Shades of White Pty Ltd as Trustee for White Unit Trust Trading as Shades of White

ACN 12345678 / ABN 91 87654321
Profit and Loss Statement for the year ended 30 June 20XX

20XX $	20XW $
Income
Interior Decorating Income	52,165	37,889
Interest Received	105	56
Gross Profit	52,270	37,945
Expenses
Accountancy	500	500
Advertising	750	600
Bank fees and charges	60	60
Computer expenses	330	330
Filing fees	212	212
General expenses	369
Home office costs	625	573
Insurance (business)	782	658
Licence and Permits	200	200
Motor Vehicle expenses	3750	3265
Postages	26	45
Printing & stationery	125	138
Subscriptions	800	192
Telephone	1200	937
Total expenses	9,360	8,079
Net profit from ordinary activities before income tax	42,910	29,866
Less Distributions to Unit Holders
Jason White	21,455	14,933
Rebecca White	21,455	14,933
Sub-total	42,910	29,866
Undistributed Income	0.00	0.00

Shades of White Pty Ltd as Trustee for White Unit Trust Trading as Shades of White

ACN 12345678 / ABN 91 87654321
Balance Sheet for the year ended 30 June 20XX

20XX $	20XW $
*CURRENT ASSETS*
Cash assets
Cash at bank	2,121	1,458
Sub-total	2,121	1,458
Fixed Assets
Sample Books	3,500	2,800
TOTAL ASSETS	5,621	4,258
CURRENT LIABILITIES
AMEX Charge Card	1,000	0.00
Sub-total	1,000	0.00
NON CURRENT LIABILITIES
Unit Holder Distributions	4,621	4,258
Sub-total	4,621	4,258
TOTAL LIABILITIES	5,621	4,258
Retained Earnings
EQUITY	0.00	0.00

Option 1 – Investment Property Loan

COMPLEX LOAN DOCUMENT CHECKLIST · (M) Mortgage loan application (Investment Property)
Data required	Enclosed?
	Y	N
Assessment cover sheet	☒	☐
This checklist	☒	☐
Diary/file notes from first contact to post settlement in chronological order	☒		☐
Authorised Credit Representative Credit Guide and Licensee Credit Guide*	☒	☐
Privacy Statement and Consent Form *	☒	☐
Client Needs Review/Fact Find*	☒	☐
Combined Credit Quote and Proposal* OR Statement of Credit Advice*	☒	☐
Cash Flow Forecast*	☒	☐
Loan Serviceability Calculator *	☒	☐
Evidence of current or other lenders’ loan arrangements	☒	☐
Copy of Offer & Acceptance OR Contract of Sale	☒	☐
Copy of Council approved plans (Development loans)	☒	☐
Evidence of Income (Pay slips, Employers Letter, PAYG Summaries)	☒	☐
Copies of last two years Financial Statements and Tax Returns with annual variances explanation.	☒	☐
Complete preliminary assessment checklist	☒	☐
Complete compliance checklist	☒	☐
Fully completed Lender Loan Application*	☒	☐
Notes to lender with details of clients’ background, requirements and your recommendation for approval and containing: ü Reason for product chosen ü Borrowing structure and reason why ü Reasons for variances in the two years’ financial statements ü A SWOT analysis ü Financial ratio analyses including Current ratio, Debt ratio and Equity ratio	☒	☐
Lender’s Loan Document Checklist (Normally forms part of loan application)	☒	☐
Anti-Money Laundering/Counter Terrorism Financing ID requirements*	☒	☐
Copy of Business Registration & Constitution and/or Trust Deed	☐	☒

The provision of all the relevant information detailed above will ensure prompt issuance of your qualification. Any omissions will cause AAMC Training to seek the missing data which can prove costly to both parties. You must include this completed check list with your assessment application.

*Samples of the abovementioned forms can be found under Useful Resources – Forms, Documents & Templates of the Utilities tab at your login Dashboard – either in the Loan Application, Complex Lending or Useful Forms folders.

Option 2 – Commercial Loan

COMPLEX LOAN DOCUMENT CHECKLIST · (COM) Commercial Loan Application
Data required	Enclosed?
	Y		N
Assessment cover sheet	☐		☐
This checklist	☐		☐
Diary/file notes from first contact to post settlement in chronological order	☐		☐
Authorised Credit Representative Credit Guide and Licensee Credit Guide*	☐		☐
Privacy Statement and Consent Form *	☐		☐
Client Needs Review/Fact Find*	☐		☐
Combined Credit Quote and Proposal* OR Statement of Credit Advice*	☐		☐
Cash Flow Forecast*	☐		☐
Loan Serviceability Calculator *	☐		☐
Evidence of current or other lenders’ loan arrangements	☐		☐
Copy of Offer & Acceptance OR Contract of Sale	☐		☐
Copies of last two years’ Financial Statements and Tax Returns with annual variances explanation.	☐		☐
Complete preliminary assessment checklist	☐	☐
Complete compliance checklist	☐	☐
Fully completed Lender Loan Application*	☐		☐
Lender’s Loan Document Checklist (Normally forms part of loan application)	☐		☐
Notes to lender with details of clients’ background, requirements and your recommendation for approval and containing: ü Reason for product chosen ü Borrowing structure and reason why ü Reasons for variances in the two years’ financial statements ü A SWOT analysis ü Financial ratio analyses including Current ratio, Debt ratio and Equity ratio	☐		☐
Anti-Money Laundering/Counter Terrorism Financing ID requirements *	☐		☐
Copy of Business Registration & Constitution and/or Trust Deed	☐		☐

Option 3 – Self Managed Superfund

COMPLEX LOAN DOCUMENT CHECKLIST · (SMSF) Self- managed super fund loan application
Data required	Enclosed?
	Y		N
Assessment cover sheet	☐		☐
This checklist	☐		☐
Authorised Credit Representative Credit Guide and Licensee Credit Guide*	☐		☐
Privacy Statement and Consent Form *	☐		☐
Authorised Credit Representative Profile*	☐		☐
Client Needs Review/Fact Find*	☐		☐
Complete preliminary assessment checklist	☐	☐
Statement of Credit Advice*	☐		☐
Complete compliance checklist	☐	☐
Cash Flow Forecast*	☐		☐
Loan Serviceability Calculator *	☐		☐
Evidence of current or other lenders’ loan arrangements	☐		☐
Copy of Offer & Acceptance OR Contract of Sale	☐		☐
Statement of Advice from a Financial Planner or a written advice from an Accountant is required from an RG146 accredited Financial Planner/ Accountant which will certify that the appropriate strategy of the SMSF is to invest in the purchase of the property	☐		☐
Fully completed Lender Loan Application*	☐		☐
Lender’s Loan Document Checklist (Normally forms part of loan application)	☐		☐
Notes to lender with details of clients’ background, requirements and your recommendation for approval and containing: ü Reason for product chosen ü Borrowing structure and reason why ü Reasons for variances in the two years’ financial statements ü A SWOT analysis ü Financial ratio analyses including Current ratio, Debt ratio and Equity ratio	☐		☐
Evidence of current or proposed rental income (copy of the lease agreement) or expected rental (R/E agent’s appraisal on letterhead)	☐		☐
Evidence of last six months’ bank statements for all cash accounts and loans.	☐		☐
Evidence of an undertaking to pay solicitor’s costs	☐		☐
Evidence of income for all individual Trustees/Directors/Guarantors (e.g. two most recent payslips, latest taxation returns or self- employed financial statements	☐		☐
Superannuation Trust Deed	☐		☐
Company searches for both Property Trustee and Super Trustee	☐		☐
Security deed between the Super Trustee and the Property Trustee (Bare Trust)	☐		☐

Option 4 – Plant, Equipment and Vehicle

COMPLEX LOAN DOCUMENT CHECKLIST · (PEV) Plant, equipment and vehicle loan application
Data required	Enclosed?
Data required	Y	N
Assessment cover sheet	☐	☐
This checklist	☐	☐
Credit Guide including Authorised Credit Representative’s details*	☐	☐
Privacy Statement and Consent Form *	☐	☐
Client Needs Review/Fact Find*	☐	☐
Combined Credit Quote and Proposal* OR Statement of Credit Advice*	☐	☐
Cash Flow Forecast*	☐	☐
Loan Serviceability evidence	☐	☐
Evidence of current or other lenders’ loan arrangements	☐	☐
Evidence of Income (BAS If required)	☐	☐
Copies of last two years’ Financial Statements and Tax Returns (Business and personal)	☐	☐
Evidence of written contracts	☐	☐
Fully completed Lender Loan Application*	☐	☐
Notes to Lender detailing your comments on the client background and requirements including: ü Reasons for variances in the last two years’ financial statements ü A SWOT analysis ü Financial ratio analyses including Current ratio, Debt ratio and Equity ratio	☐	☐
Lender’s Loan Document Checklist (Normally forms part of loan application)	☐	☐
Anti-Money Laundering/Counter Terrorism Financing ID requirements *	☐	☐
Copy of Business Registration & Constitution and/or Trust Deed	☐	☐
Copy of Broking Commission Tax Invoice	☐	☐
Copy of Offer to Purchase / Supplier’s Invoice (Showing serial numbers etc. to identify goods)	☐	☐
Copy of Broking Commission Tax Invoice	☐	☐

A sample of the forms mentioned below can be found in the AAMC Members’ Area under “Useful Resources – Forms, Documents & Templates” (www.aamctraining.edu.au)

1. Financial Services Credit Guide/Credit Guide	Along with the ACR’s profile this guide is handed to the clients at initial interview and it sets out the services that are offered along with the Privacy Policy of that organisation and the complaints procedure.
2. Authority to Act & Privacy Consent Form	The authority to act allows the finance broker to act on behalf of the client when dealing with the lender and other related parties to loan. The privacy consent form allows the finance broker to store and use relevant client information to assist in the loan application process without breaching privacy laws. This will most likely be contained in the credit proposal (mentioned below).
3. Authorised Credit Representative profile	This form is which sets out the Authorised Credit Representative’s profile and authority to act on behalf of a credit licence holder and what products the ACR can introduce to under that authority. At initial interview the clients must be handed a copy. This may be an addendum to the Credit Guide.
4. Data Collection – Business or Personal Consumer Client Needs Review/fact Find	By using a Client Needs Review/Fact Find you will have all the information required to form an opinion as to what type of loan best suits the clients’ requirements. At the same time, you are acting with due diligence in asking the clients questions about their financial security in the event of an unforeseen circumstance that causes financial hardship. You have a legal obligation to yourself and the clients to make them aware of the ramifications of an unexpected illness, accident or even death. By signing a Client Needs Review they can accept your offer of a referral to an insurance professional or alternatively decline your recommendation, thereby you have documentary evidence of your professionalism. You do not have to sell Risk Products but you have complied with the requirements under the Duty of Care by having adopted the above actions.
5. Costing sheet for fees and charges	Estimate of total fees and charges payable to the financier in relation to applying for the finance will form part of the credit proposal. However, the broker may want to complete a cost analysis to determine savings or equity versus costs associated with the purchase and finance. This is not a requirement of the submission but may rather be a process you may want to adopt for purchases.
6. Interview notes	A file copy of your interview notes will go a long way to avoid any adverse opinions from any audit that may be undertaken by any aggregator company or ASIC official. Whilst documents required under NCC such as a fact find/client needs review, preliminary assessment and credit proposal will highlight requirements and recommendations they may cover all conversations/ time lines between the broker and client.
7. Preliminary Assessment	Based upon your enquiries as to the financial situation, requirements and objectives of your client you are required to conduct a preliminary assessment to determine whether the proposed credit contract/lease is ‘not unsuitable’ for the client. This must be done prior to suggesting the client applies for, or providing assistance applying for a particular credit contract.
8. Credit Quote and Credit Proposal Documents	These forms may be incorporate into the one document. The Credit Quote outlines the maximum fees and charges payable to the credit representative and licensee for credit assistance. Must be provided before credit assistance is provided. The Credit Proposal document outlines the fees, charges and commissions relating to the particular credit contract or consumer lease and to whom/by whom they are payable.
9. Statement of Credit/Mortgage Advice	This is the document the client signs giving the Authorised Credit Adviser authority to act on the client’s behalf and also give privacy consent for the personal details to be passed onto the lending institution. It also advises the amount of commission a broker will receive as well as the costs involved in taking out the loan. A copy of this appointment must be given to the client and a copy kept on your file. This document may be a combination of industry known documents as stated above and not required if you have completed credit proposal and credit quote
10. Evidence of income	Lenders require documentary evidence of income to support a loan application. Verifying employment may be in the form of two or three consecutively dated payslips plus a PAYG summary that indicates regular overtime or allowances/commissions. A letter or employment contract from the employer will also suffice in the absence of payslips. Other income will require documentary evidence as determined by the lender.

11.Self-employed/ Commercial clients	A copy of the last two years’ individual’s and company tax returns/financial statements along with a serviceability assessment for self-employed individual/partner.
12. Signed statement of assets & liabilities (SOP)	This information allows lenders to readily ascertain the financial standing of the applicants.
13. Cash flow forecast	When you are arranging funding for the larger type loans, whether it is for plant and equipment or say, a commercial factory unit a Cash Flow Forecast is essential as it will assist the lender in appreciating where the business is headed. But remember it will have no bearing on the lender’s decision-making as it will look only at anecdotal evidence.
14.Serviceability	When submitting an application, you are to include a Serviceability Assessment sheet which shows the lender you have ensured the clients can afford the loan. You will find these assessment tools form part of the lenders’ online broker toolkit and are relatively simple to use. When you undertake your accreditation training each lender will provide the facility or you will have access to all the tools through your aggregator.
15.Copy of the Offer to Purchase/Suppliers Invoice (Showing serial numbers etc. to identify goods and chattels)	A sheet of paper representing the document will be sufficient evidence. However, most lenders will be required to verify the original document. You will be advised of their requirements when you complete the accreditation courses. This information is vital in proving ownership of the goods.
16.Copy of the Offer and Acceptance (WA) or Contract of Sale	Lenders need a copy of the completed O&A or COS to verify the purpose of the loan and for the ordering of valuations, if required. You will be advised of their requirements when you complete the accreditation courses. It is also worth noting that some lenders will only carry out a kerb-side valuation when the LVR is 80% or less.
17.First Home Owners Grant application	Whilst the Federal Government provides the funding for these concessions each State and Territory Government administers the schemes. Therefore, so your clients can get the maximum benefits available, your task is to research this area of funding thoroughly by visiting the Office of Revenue in the jurisdiction in which you operate. These forms are to be completed to accompany your case study files.
18.First Home Buyers Stamp Duty Concession application	As explained above there are variances in what concessions are available. However, notwithstanding the fact that in some areas solicitors/conveyancers or settlement agents handle this aspect of the transaction, we at AAMC believe it is up to the Broker to ensure that there is a smooth settlement transition. This will happen if the Broker provides the clients with the necessary paperwork, has it completed correctly and keeps it on file for presentation to the correct parties when settlement is due to take place.
19.Copy of Motor Vehicle Registration Papers	For the same reasons as stated in item 12.
20.Private Sale documents	You may not come across this type of loan requirement often; however, you will be required to produce additional information such as: a. An inspection report b. A valuation report c. A Statutory Declaration from the supplier/owner showing ownership and encumbrance free d. Vendor ID and bank details.
21.Fully completed loan application	Let us first accept that all lenders require the same information, however with the layout of their application forms it just appears in different places. You are not only expected to provide the clients’ full personal details, but you are obliged to be honest and frank about the information you are submitting. As a Broker you are also obliged to inform either the lender or the client of any information of which you become aware that may have a material effect on the transaction. If you do not follow this principle you could well become the subject of legal action from either party. The application forms are quite simple to complete provided, however, you have gathered all the information to make it a simple task. There is one area on confusion and that is the completion of the “Declaration of Purpose”. By completing this incorrectly, you may jeopardise your clients’ rights under the National Consumer Credit Protection CT 2009.

22.Notes to Lender	Lenders when assessing a loan rely heavily on information provided. They do not have the privilege of sitting down and interviewing the clients. As you have already learnt, Brokers must provide as much information as possible when submitting a loan application, of any nature, to ensure a fair and reasonable decision can be made by the lender. Therefore, it is in everybody’s interests to highlight valid points in a Cover Sheet. Shown below this table are two options that tell a tale. Please do not just copy these examples and submit – use your initiative and present the information along similar lines as we have demonstrated. There will be many and varied reasons why you think an application should be approved so let the lender share your reasons. Don’t make them second guess. If you follow this path, it will stand you in good stead with the lenders and exhibit a standard of professionalism that unfortunately not enough Brokers take seriously. Half measures or the attitude “Close enough is good enough” does not wash in today’s competitive economic climate. Lenders that receive half-baked applications will put them to one side and get on with the fully detailed ones to acknowledge the correct presentation.
23.Lender’s document checklist	All lenders have a checklist to ensure you have submitted the application correctly with all the supporting documentary evidence. Please ensure this is completed.
24.AML/CTF ID Information	Due to criminal activities and money laundering you have to provide the necessary identifying documents to support the application. Where you are dealing with a client’s existing lender, note on the lender’s document file/checklist that you haven’t supplied the information because client is known to the lender. Some lenders carry out their own verification through their branch network.
25.Business Registration/ Constitution and/or Trust Deed	Business registration legitimises the authenticity of the applicant. The Constitution and/or Trust Deed reflect the authority of those able to act for and on behalf of the company.

LOAN APPLICATION NOTES

These notes will be part of the loan submission and should be included with the loan application.

This form is for guidance only and you will need to create your own method.

Loan application for MR XXXXXX & MRSXXXXXXXX

XYZ Family Trust

Located in Loan application-structured process section in your learning guide

Applicants’ details

This should include a brief resume of the clients’ background and what they seek to achieve in the future with the granting of this loan application. Projects undertaken and results, if any.

Purpose of loan

An illustration of how the requested funds will be utilised.

Brief details of security offered

A description of the security and its estimated market value.

Amount of Loan required

A brief loan scenario such as;

Loan (1) $50000 P & I over 10 years @ 6.45% Fixed

(2) $375000 I/O @ 5.49% fixed for 3 years

(3) $200000 P & I over 25 years @ 6.33% variable.

Management- Directors and officer’s skills, company structure

Business- at what part of cycle, plans for future growth, business plans available

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

Located in Understanding financial ratios section in your learning guide

Financial ratio analysis

Current Ratio

Quick ratio

Debt ratio

Equity ratio

Located in Reading financials with confidence section in your learning guide

Financial Statement variances

Explain reasons for major variances in financial statements in your own words

SIGNED…………………………………………………………… Date…………/…………/………………

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