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Shaky Secured Loans

More and more businesses are taking out loans secured against their homes – and there are worries that a continually shaky housing market could put this in jeopardy. As bank funding is often denied many small businesses, they are securing loans against their own private assets to expand or keep running.

Secured Loans

New research has shown that small businesses are just as likely to seek a loan secured against their home as they are to seek an unsecured loan or overdraft. UK housing prices are looking shaky for the coming year, which could affect this route to finance for many small businesses. It’s not a safe route to finance that the government wants to create small entrepreneurs to help the economy recover.

A new survey has shown that over the last year more than one in ten small business owners have needed to put their homes on the line in order to keep their doors open. A further third would consider this route to finance if they were unable to get funding to remedy late payment problems, cash flow, tax bills and wages.

Uncertainty

Rebalancing the economy is already made tough by tight credit conditions, unwilling banks and Eurozone stability, which has added up to low lending rates for small businesses.

If the housing market continues to stagnate, then the ability of entrepreneurs to stake their home for finance will also falter. A backdrop of uncertainty over housing prices will not encourage lenders to help small business.

Bank loans are in general not free flowing, and it’s clear that secured loans will be unable to compensate for the funding gap in the present funding climate.

There are other ways to free up funds to finance expansion or just to keep day to day running viable. Invoice discounting and factoring are flexible ways to release cash flow tied up in unpaid invoices. This can help with cash flow and late payment problems, and doesn’t mean borrowing against your own possessions.

With nearly one in five business owners having asked family and friends for funds, it’s clear there needs to be more business funding options. Invoice finance is one that looks set to grow.

 

Select Factoring.

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