SME businesses often need to borrow money. Typically, their suppliers need to be paid before their customers settle the accounts owing to them and this inevitably puts pressure on cash flow. Keeping this cycle moving effectively to avoid running out of money demands that a certain amount of money is available to the business at all times — this working capital requirement may be supported by a bank overdraft or other business finance solution and over time and once established enough, possibly from the businesses profits, but this only comes after a long period of successful trading. If the business is growing fast, the capital required could far exceed the surplus generated from trade, meaning continual borrowing is needed.
For some, whose bank overdraft is fully utilised or withdrawn or scaled back by their bank; or where they have entered debt management arrangements with HMRC and are being squeezed by high levels of repayment; possibly they have been hit with a big bad debt or maybe where they have already taken one or more specialist short term business borrowing arrangements and have reached the ceiling. In these situations, the business frequently just cannot make ends meet. At this stage alternative business borrowing such as secured business loans can make a lot of sense and help get things back on track.
A secured business loan may be available using equity from property, whether that be the director’s residential property or an investment property or semi or full commercial property, even property owned by the limited company.