New research has revealed more than one in 10 (12 per cent)
small and medium-sized enterprises (SMEs) risked repossession of
their homes in order to keep their business afloat last year.

The study from borro.co.uk, an online asset lender, found a
third (33 per cent) of SME owners would consider putting up their
family homes as loan collateral in the event of being unable to
secure finance to cope with cash flow difficulties.

The number of small business owners having to consider secured
and unsecured loans is growing, underlining a possible shift in SME
attitudes towards finance, with banks amending their lending
criteria in the face of continued economic uncertainty.

Paul Aitken, CEO of borro, said: "Using your family home as a
guarantee for a loan is a huge step for a small business owner and
can be risky in this uncertain economic climate but it seems many
feel they have no other choice.

"It's surprising to see that as many small business owners would
consider applying for a secured loan as would apply for an
unsecured loan or an overdraft, a sign that as banks continue to
make it hard to access unsecured lending facilities, so those that
require property as security become the next thing to turn to."

A lack of available finance is seen as an increasing problem by
SME owners with a quarter (24 per cent) of the entrepreneurs
surveyed believing to have missed out on potential growth
opportunities, such as new office space to
rent or new marketing campaigns, due to poor access to
finance.

Ambition to pursue business growth has seen over half (57 per
cent) of small business owners turn to their personal savings
accounts in order to keep their business afloat, with an additional
17 per cent admitting to turning to friends and family for
help.

 

Image: ChillaII

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