How To Fund Your Business With Equity Release?
What do you do when the bank says no? How can you fund your business when traditional methods of funding are not available to you? Do equity release schemes offer a solution? Equity release is a type of loan that is secured against your house. It works by releasing some or all the equity in your property as security for the loan.
According to FundWeb, this type of financing has become increasingly popular with small and medium-sized enterprises, but it does have its risks. In this post, we will discuss how equity release could work for your start up so that you can make an informed decision about whether it's right for you.
3 Reasons to Get Funding for Your Business: Equity Release
Finding a good way of funding your business can be difficult, but it is possible! Equity release could be the perfect option for you if you want to fund your business without taking on any financial risks or getting into debt. Read on to know the best 3 reasons why you should use equity release for your business.
1. Keeping Control of the Business
Existing stockholders' major concern in these scenarios is maintaining overall control. When a private equity firm buys a minority position in a company, this problem is frequently solved. Existing owners retain control over strategic choices and bank borrowing - cashflow or asset-based loans to enable a lump sum withdrawal.
2. Reducing Risk Exposure
Shareholders that want to lower their risk exposure may seek equity release. However, it is not only the infusion of capital that is critical in this case. Some funders will bring complementary skills and ideas to the table to add value to the company, and it is critical that the investment be serviced without jeopardising future corporate growth goals.
In reality, if there is any doubt about a firm's ability to service a release of stock, or about the surviving owners' ability or willingness to keep the company in good shape, it is unlikely that prospective investors will be interested in investing.
3. Business Succession
Equity release is an apparent answer for a shareholder working in the business who is approaching retirement and wants access to the monetary value they have helped build up. If the business is family-owned, this form of finance may also provide an incentive to the following generation. It is a great way to fund your business if you have equity in your home and want to protect it.
Equity Release has been around for a while and is used to fund many different things. Now, it's being applied to business funding in an effort to help entrepreneurs without the safety net of cash or collateral get their ideas off the ground on less risky terms.
This type of loan is designed for people who have equity in their home and want to borrow against it. The equity release loan process is more straightforward than a conventional mortgage. With less hoops to jump through and if you’re considering funding your business with an equity release loan seek for a financial adviser to help guide you through from start to finish.
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