Leveraging property assets to drive business ambitions
By Jonathan Rubins -
Business performance has been under particular scrutiny in recent months as we all look for signs of sustained economic recovery.
The latest SME Trends Survey by CBI shows that growth slowed over the past three months, following July’s record rise in output. However, it says that growth remains solid in comparison to the long-term average, and is also expected to pick up again in the coming quarter.
According to the survey, only 70% of respondents said they had sufficient capacity to at least meet demand at the moment, which is lower than at any other time in the history of the research.
Consequently, it found that firms expect to increase investment in plant and machinery, product and process innovation, and training and retraining in the next 12 months.
This presents an opportunity for brokers to engage proactively with their base of self-employed clients as these business owners may well need access to capital to help them to improve their capacity and invest for the future.
Many of these businesses are likely to have experienced a drop in turnover over the last 18 months as a result of Covid, which could limit their capital raising options through traditional commercial lending channels. However, while many businesses have had limited opportunities for growth, house prices have enjoyed healthy growth despite the pandemic.
This means that those business owners could well have equity available in their home or investment properties that they may be able to access through a business purpose bridging loan. This could then enable them the capital they need to make the most of the opportunities presented by the economic recovery and put themselves in a stronger financial position for the future.
Of course, it’s not always immediately obvious just how much capital a business will need. Borrow too much at the outset and a business owner incurs unnecessary interest costs, whilst borrowing too little could result in having to re-apply for finance, which may also cost more in fees and will almost certainly take up more time.
However, there are products available then enable business owners to draw down capital as and when they need it with a pre-agreed overdraft facility.
For example, at Alternative Bridging Corporation, our Alternative Overdraft is a flexible loan facility that can be drawn upon and repaid, time and time again. It avoids delay and expensive setting up charges each time a loan is needed and there is no interest charged when the facility is dormant.
For business owners looking for investment to keep up with demand, a bridging loan secured on property can provide the capital they need. And, with an innovative product that enables drawdowns as and when the funds are required, business finance can be secured quickly and efficiently.
So, if you want to help your clients to scale their businesses, think about how they could use their property assets to help fund their ambitions.
Jonathan is a Director at Alternative Bridging Corporation, a principal lender, offering the widest range of short and mid-term products, to the property industry and business community as well as bridging loans to homeowners.