Research carried out by borro.co.uk has revealed that 12 percent of Small and Medium Enterprise owners put their home at risk of repossession in 2011 in order to save their business. The online lender which provides loans using assets as collateral, also discovered that a third of SME owners would give consideration to putting their home up as collateral if they were facing severe financial difficulties that affected cash flow or the ability to pay employee wages.
Surprisingly, the number of small business owners who are looking for a secured loan is increasing at the same rate as those owners who are considering an unsecured loan, which is currently 38 percent.
A third of business owners are looking at an overdraft facility. The change in attitudes by small business owners is thought to be due to the tighter lending criteria applied by banks when applying for business funding.
According to the CEO of borro, Paul Aitken the increased number applying for secured lending is an indication that it is getting harder to be accepted for unsecured lending, so using property as collateral is the next step. Opportunities for growth have been missed as a result of insufficient finance, according to 24 percent of respondents.
The survey also revealed that more than half small business owners use personal savings to keep their business going, while 17 percent approach family and friends for assistance. Careful business finance planning using the expertise of a small business accountants may prevent the owner of a company having to risk personal assets in order to survive.
