Product of the week: Raising capital for business investment purposes

This week, we’ve been investigating how self-employed borrowers could be using the equity in their homes as a source of low-cost capital to invest in a business. Our product for this week can help you do just that, be it for a sole trader, partnership or a limited company (of which the business does not need to be profitable) designed for raising capital for business investment purposes.

Rules outlined by the Mortgage Conduct of Business (established by the UK financial services regulator) previously applied a limit to lenders’ abilities to permit the release of equity from a home. However, there is an exemption to these rules, which allows the proceeds from a second charge loan on a borrower’s home to be used for commercial purposes. The regulations specify that the amount borrowed must exceed £25,000 and the funds must be destined for a legitimate business.

This is available for a wide range of purposes, whether you’re intending to expand an existing business, invest in new equipment or are making a new acquisition. Similarly, funds can be used to buy into a partnership or buy out the shares of other partners within a business.

There are a few things that are worth noting, however. The lender will require a clear description of the use and proceeds of the loan and will usually expect you to be an existing shareholder of the relevant business, or be using the loan to acquire an interest in said business.

It is also important to be aware that when raising a mortgage loan granted via the business purpose exemption, you do in fact give up ‘consumer’ status in respect of that particular transaction, which means you will no longer benefit from the same level of regulatory protection that usually comes with it. When applying for this product the lender will require you to sign a declaration to confirm your understanding of this.

Specialist fixed rate loans for raising capital for business investment purposes

In line with this, we work very closely with an institution that specialises in this type of lending and is currently offering exclusive access to fixed rate products designed for raising capital for business investment purposes. The lender will typically offer funds on a fixed rate basis, which can then be rolled up for payment on redemption of the loan.

One particular thing that sets this product apart from others on the market, is that this means there is no requirement to make monthly payments! As far as pricing is concerned, rates typically start from 7.49%, however, these are variable dependent on the nature of the individual application and offer greater flexibility than the majority found on the high street as a result.  

Loans are available from this lender for terms ranging from one to five years and come with no maximum lending age limit whatsoever. As every case is underwritten individually, the lender will also take a much more flexible approach to income, with the option to also consider loans for expats, foreign nationals and non-domiciles.

This is an extremely beneficial offer available exclusively to this lender. If you are interested in this product, we would be more than happy to introduce you to the relevant lender and provide expert advice for your circumstances.

Arrange to speak to an Enness Broker