If you own property, then you will be no stranger to the rise and fall of market values. You’ll know just how quickly your equity can go up during a boom, and then how quickly it can fall again. And many property owners are experiencing loss of equity at the moment due to the market down turn.
If you’re looking to acquire finance to fund your business plan, a loss of property equity has not necessarily put you out of the running. The key is to look outside property equity as your means for securing funds.
Business Loan Types
It is possible to secure finance for your business without having to put your property equity on the table. It’s best to speak with your experienced finance broker about which options will be suitable for your circumstances. In the meantime, here are a few different types of loans to consider that don’t put your personal and commercial real estate at risk:
Unsecured Business Loan
An unsecured business loan does not require any property or assets, and is instead approved based on the strength of the business, annual revenue, and your personal credit score.
While an unsecured business loan can incur higher interest rates and repayments, if you have excellent personal credit and income, and/or your business has a reliable source of revenue, this can be a very low risk loan option for you. If all your boxes are ticked, you should have no trouble servicing the repayments. But, should the worst happen and you default, your property won’t be listed as collateral.
With this low risk also comes fast approval times as there are no property or asset valuations to undertake. In some cases, you can be approved in a matter of days.
This is finance secured against your debtors, rather than your property. This is essentially finance associated with your incoming invoices. Even though these invoices haven’t yet been paid by your debtors, they are viewed as an asset by the lender.
This sort of finance option therefore improves your cash flow, allows your business to grow and expand without leveraging property, or having to wait for your invoices to be paid.
This is an excellent option for businesses that want to keep up with demand but have extended invoice terms for their customers.
Business Line of Credit
A business line of credit is an especially flexible form of financing, that does not require any property security.
While the interest rates can be higher than traditional secured business loans, you are only required to pay interest on the amount you have withdrawn. So, while you can have access to more funds without having to reapply each time, you do not have to pay interest on the full amount.
This finance option has great flexibility, it’s convenient, and especially useful for businesses that want to expand and access cash flow fast.
Borrow Against Business Assets
It’s possible to borrow against your business assets, without having to secure it against your property.
Equipment finance allows you to secure funding against assets including heavy machinery, furniture, computers and other office equipment, and vehicles.
While you are still offering security for the loan, you are not risking your property, or relying on your property’s equity.
Your vision for your business is not limited to how much equity you have in your real estate holdings. If you are looking to secure business finance set up an appointment to speak with your finance broker.
Discuss your business plans for expansion, and together you’ll be able to determine which finance option is best suited to meet your goals.