There has been a steep rise in the number of SMEs using luxury personal assets such as jewellery and top of the range cars to gain funding for the business, as many continue to experience problems in accessing traditional sources of finance, according to Borro which specialises in offering loans against high value items
Borro says the volume of small businesses that use this method to access finance has increased by 30%, and now accounts for 70% of its customers. The average loan value for this client base has increased by 16%, from £26,000 to £30,000 in the last year, with Borro stating that unexpected tax bills and unpaid invoices are among the reasons for the requests.
In addition, Borro says nearly 1000 small business owners have used its service this year, of which 20% are in the process of setting up a new business.
Latest Bank of England figures show net lending to SMEs through the government's Funding for Lending scheme was down in the second quarter of this year, contracting by £400m.
Paul Aitken, CEO and founder of Borro, said: ‘Securing finance remains one of the biggest challenges faced by the nation’s small business owners and entrepreneurs, and despite various schemes in place, many are still unable to access finance via traditional means while others simply choose not to. At Borro, customers continue to value the efficient service we offer allowing them to facilitate often urgent business transactions within the given timeframe.’
Since its launch in 2008, Borro has lent a total of £100m of which £50m has been loaned to businesses, who put up items such as antiques, prestige cars, luxury watches, gold, paintings, diamond jewellery and fine wine as collateral. It offers loans of up to £2m.
