I’m not a home owner – can I get funding for my business?
Loans21st February 20190 CommentsLeyton Jeffs
“Are you a home-owner?” Is a question I hear a lot when my team are talking to potential funding clients, looking for finance. The question is for good reason, but I do know clients are often spooked by it. When a director has a Limited company, they expect, or certainly hope that a business’s finance application can stand on its own merits and whilst a personal guarantee might be required to support the application (see my previous post on Personal Guarantees), a question of home ownership can make a client feel like the house could be taken away!
It’s not as daunting or leading a question as you may think though. Finance for non-homeowners is often still available but during the process of applying for finance, some lenders will only lend to clients who fit a certain criteria; including the director being a homeowner. When we ask this question, it is generally us looking to shortlist a number of the lenders that best fit your circumstances – we have well over 100 lenders so shortlisting this down to a handful that we will propose it to saves everybody time!
Why does it matter if I’m a home-owner or not?
When a lender is considering whether to lend to a business, it takes lots of information into account on both the business and the people behind it: length of time trading, profitability, business assets, track record of directors, etc. Whether you are a home owner or not gives a lender one element of a director’s track record (along with credit score) as there is a perception that people that own their own homes are more financially secure!
For funding deemed as higher-risk, or where there is no business security (property, debtors, stock), lenders will often use personal guarantees which look at you as an individual as a way of securing the loan. Being a homeowner means that even if the lender isn’t taking anything tangible with the guarantee, there is more leverage in your personal guarantee and often, more worth.
What if you’ve been declined by everybody already?
With so many lenders out there, I’m seeing more and more appetite to lend to what mainstream lenders might call ‘risky’ businesses. As competition for this business becomes more and more fierce, lenders are also reducing the security it requires to approve to create a USP and this is great news for you!
This means that for those businesses who’ve been declined by their bank or another lender, all is not lost – we find that in 90% of all people we speak to (and most of them have already had at least one rejection), we can offer them some sort of finance through our panel!
How to get the best deal
Sadly, almost all business owners that apply for finance directly to lenders, do not get the best deal available to them – and best doesn’t always mean cheapest. It could be not getting the best security pledge or the correct term or most flexibility. It is common sense that if you approach 5 lenders, you can only get the best deal that those 5 lenders offer and this is where we come into our own.
With a team of experienced funding specialists, we have the expertise to understand what “best” means for you and with our experience and sheer volume of lenders at our fingertips, we can go out to a larger pool of funders to get you the very best solution available to your business