What is multi-financing?

Each lender has a separate facility agreement that sets its own rate, term, covenants and security, and repayments follow each facility's schedule. Where lenders share collateral, an intercreditor deed or subordination deed sets priority, enforcement timing and information sharing, and decides how insurance proceeds or sale receipts are split between them.

Facilities may be tranched by tenor, such as a short bridge alongside a long amortising loan, or by seniority, with senior and subordinated tranches. Watch for cross-default and cross-collateral clauses: with these in place, a default under one facility can trigger the others. Expect some legal coordination between lenders before settlement, especially when the security overlaps.

Multi-lender or syndicated structures have several lenders each providing a tranche under coordinated documentation. Multi-product structures use different finance options, such as hire purchase, a lease, a loan and vendor finance, across different assets or portions of the purchase price. Multi-asset facilities cover many assets under one agreement with separate schedules and terms for each asset class.

Split-term structures finance part of a purchase short term, through a bridge or vendor credit, and the rest on a longer amortising loan or lease. Layered security has one lender secured over finished assets while another is secured over inventory or receivables. In practice you might lease specialised machinery, fund general plant with an amortising loan, and use vendor finance to cover the gap between delivery and long-term settlement.

Multi-financing suits a large or mixed asset base where vehicles and specialised plant want different terms, a business spreading exposure across lenders, a purchase where the vendor offers finance on part of the price, a deal that needs bridge finance plus long-term amortisation, or assets with different tax or accounting treatment. A single lender is faster and simpler for a straightforward purchase; syndicated loans suit very large capital projects. Each lender also assesses you separately, so expect to supply financial statements, BAS, cashflow projections, asset quotations and company and director details more than once.

The risks are legal complexity and negotiation time, higher establishment and legal fees, more reconciliations to manage, priority disputes from poorly drafted security or late PPSR registrations, covenant stacking that raises the chance of a technical default, and rollover risk from mismatched maturities. Clear intercreditor terms, coordinated PPSR registrations and early legal and tax input are the usual safeguards.

If you are registered for GST, the GST on asset purchases may be claimable as input tax credits. The finance option used for each asset decides who claims depreciation, and vehicles available to employees can attract fringe benefits tax. Under AASB 16 most leases put a right-of-use asset and lease liability on the lessee's balance sheet, while a loan creates a financed asset and a liability, so a split package produces mixed accounting outcomes.

Each secured lender should register a financing statement on the PPSR for the collateral it takes; registration timing, perfection and collateral type all affect ranking. Personal or corporate guarantees increase lender recourse but complicate enforcement across several creditors. Have your solicitor map the assets, proposed security and PPSR timing before you sign, and confirm the tax outcomes with your accountant.