As a business owner looking for funding without using your home as security, you still have the option of unsecured personal loans, merchant cash advances, asset finance, and invoice finance.Get Loan
A non-homeowner loan is an unsecured loan that does not depend on you owning any assets (car, home, accounts receivable, inventory, and property, plant, and equipment (PP&E). Given that the vast majority of people under 40 in the UK do not own the house or apartment that they live in, these types of loans make it possible for individuals and business owners to access credit without having to put forward the family house or business as collateral.
To successfully apply for a non-homeowner loan, you will need to have a good record of repaying loans in the past, and that includes everything from credit cards (personal and business), overdrafts, and any other source of funding that you have applied for and, or, have received money for in the recent past. Lenders will want to see that you have a steady monthly income, so they can trust that you will be in a position to meet monthly repayments for the agreed-upon timeline. With a sharp decline in home ownership in the UK, non-homeowner loans have never been more popular and are a perfect way to get a loan without the need for security.
If you have applied for a loan in the past, you will be familiar with the question: are you a homeowner? For most people under the age of 40, this question is a firm no, yet finance is still obtainable for business owners who are not homeowners or who have decided not to provide a personal guarantee. When you apply for a business loan, you will be asked to provide certain information, for example, whether you are in fixed or part-time employment, if you own a business, you will be asked how long you have been trading, and for your annual revenue figures. In essence, a lender simply wants to see if you can be trusted to repay a loan back in full without missing any payments.
The more information and certainty that you can provide the higher loan amounts and better interest rates, you will be offered. You can save a lot by comparing the market, as specialist lenders can offer tailored deals based on your unique situation, this is not the case with mainstream lenders.
Non-homeowners don't have it easy when it comes to getting access to capital, however, there are several options on the market, where there is no need for security, these include unsecured personal loans, merchant cash advances, asset finance, and invoice finance.
An unsecured personal loan is any type of loan that is not backed by personal assets like your house, car, or business. You can apply for this without having to worry about putting forward security that will be claimed in the case of a payment default. There are many people who are not comfortable with the idea of losing valuable assets if they can’t repay their loan so they choose to deliberately apply for an unsecured personal loan, however, the interest rates that you will have to pay will be much higher than the equivalent homeowner guarantor loans.
The lender will not use your assets as security, instead, they will assess your loan application based on your creditworthiness, and for this, they will consider your credit score among other things. Bear in mind that there are specialist lenders who will consider applications from individuals with bad credit, or who have had a previously good credit history affected during the pandemic. There is also the option of tenant guarantor loans, which are becoming one of the most popular forms of borrowing for those with a slightly tarnished credit history. This is a hark back to the old-fashioned way of lending, where a friend or family member backs the borrower’s ability to repay the loan, and most importantly, agrees to cover any missed instalments.
A merchant cash advance is a type of business financing particularly well suited to a small business that accepts debit and credit card payments from customers. If you are looking to expand your business, or simply take out a non-homeowner loan and you own a business, it might be possible to raise the required capital via a merchant cash advance. This is a new source of finance for businesses, that is an advance plus a fixed fee paid back based on credit/debit card takings from your business.
For non-homeowners that also run a business, asset finance is a flexible approach to funding, that gives your business access to the latest equipment, machinery, and technology to scale without compromising cash flow. It can be used to purchase both new and used assets, or for tapping into value held in assets that you already own. Asset finance is now a booming industry and is becoming one of the most popular types of funding for non-homeowners.
Invoice finance is an umbrella term used to describe invoice-based lending products such as invoice discounting and invoice factoring. This is a type of funding for non-homeowners that taps into cash that is tied up in customer invoices, so it speeds up the accounts receivable process, giving you upfront cash for working capital or for unforeseen expenses, in return the lender will take a percentage of the invoice value for services rendered.
Every business has different needs and requires a level of support that facilitates further business growth. At Funding Options, we provide SMEs access to the most extensive range of business loans, business lending and alternative finance on the market.
Through our innovative technology, Funding Cloud™, we can quickly and efficiently introduce applicants to providers, each regulated by the financial conduct authority. Since we started in 2011, we’ve helped more than 11,000 businesses get the finance they need quickly and easily. That adds up to over £0.6B in funding for businesses in the UK and the Netherlands.