Thanks Dan.. I'm not quite sure how I'm going to get round this. I'm lucky to have the option to sell my house, buy one for 300K (still a nice house) and have my own funding. But I don't want to wait, I don't want the uncertainty and I don't want to move!

If I solve the problem, I'll let people know.

daniel12:

ultimately the loan would be secured against business assets

No. The bank is being offered a charge on a house as security.

The issue is that it is one of the edicts of banking that any business venture must involve a cash input alongside an input of borrowed money. If an application was made today for £50k to pay for a daughter's wedding and then Pnep went back to the bank in a few months to say that the wedding was off and that there was £50k cash to be put into a business venture then the bank is likely to agree to lend another £50k. However, without any silly moves like this, many banks will reject an application for £100k for a business venture without a cash input irrespective of the available security.

Hiya,

unfortunately, although many lenders want you to a be a home owner, ultimately the loan would be secured against business assets, so it would depend on what you are going to buy with the loan?

Dan

That's the way it is !

Does anyone know of a reliable institution that will lend about 100K , for business start-ups, using a house as security.... but without a cash deposit?

Yes, I agree with your comments. The thing is that the bank will have one procedure for business ventures whereby a fundamental requirement is a cash investment from yourself and the security of the property merely adds to the chances of acceptance, and there's another procedure for remortgages whereby you borrow money for home improvements, a new car, a big holiday, children's weddings, etc and there they would just look at affordability. The problem is that, as soon as you mention business needs, you get pushed to the business bankers with their particular procedures. I feel that it would not be a good idea to enter into any sort of deception for sums like this and, unfortunately, the bank does need to ask what the money is for just in case there's someone sitting at home pointing a gun at your family while you get the money.

It's a good point Max - and thanks for your reply. I still don't grasp the bank policy... because, as far as I see it, the only risk the bank takes, is the messing about recovering their money by selling my house from under me, if things go wrong ! And if that happens, I suspect they would be pretty ruthless.

I risk my home.... so I risk far far more than them. If I sell my home now, and buy one for 250K, I could pay my mortgage and have enough left over to input the required 50% cash injection... which would delight them.... so I don't see the philosophical difference between that, and them simply lending me the money against the equity in my current home.

Essentially, nearly half of my loan would go on stock, with more on rent, wages, professional fees... which all look a bit intangible - so without lying through my teeth... which woiuld leave me forever worried about instant foreclosure, I don't know what to do.

I filled in a form on moneysupermarket.com earlier... which found a company that, according to the written blurb, would make a loan of up to 100K "for any purpose".

I suspect I could live with 100K by adjusting the phasing of some stocking and some general spend... but I just have a suspicion that, when it comes down to speaking with people at the loan company, that there will be a catch... just like there was with Barclays and LloydsTSB. I'll find out soon!

I'm hoping that someone on this forum has had previous relevant experience.

thanks though max... any other ideas welcome!

The policy for business start ups has always been that the bank's money wont be risked unless some of your money is also risked. Without knowing the nature of the business, it is difficult to advise but would it be reasonable to tell the bank that you are wanting the money to invest in some premises/venture/item rather than start a business? The difference may seem small but if you asked for the money to buy a big white van the bank is more likely to agree than if you appeared to be intending to spend the money on something less tangible.

I've got a house worth >400K, with an outstanding mortgage of 110K - so 300K in equity but I have virtually no cash.

I want 125K to start a business. But I'm struggling to get through bank lending policies. The adverts never say it, but when you get to talk to real people, then basically it seems that it doesn't matter if you have a billion pounds in equity... if I want to start a business... they will only lend you about half the money - the rest you must supply in CASH.

And they have a policy that they will extend your mortgage if you want to buy a car.... but not to set up a business. And if you get a personal loan, they disallow this - it is not allowed to use it as your 50%.

Has anyone got round this? Thanks in anticipation