23/10/2020
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The non-bank industry is often ignored when and advisors make funding recommendations to their clients. The cost of capital available to non-bank lenders is substantially higher than the major banks and an assessment on funding costs only will more often than not favour the majors. But what about the opportunity cost?
Crest Capital Asset Management (Crest Capital) has compiled a case study of a transaction that involved one of its clients to illustrate the opportunity cost >> https://www.crestcapitalmanagement.com.au/the-opportunity-cost-of-bank-finance
The client found that it had to offer discounts/incentives as high as 10% off its retail price to attract off-the-plan purchasers prior to commencement of construction. However once construction started, its discounts reduced to 2.5%.