Around 8,000 business applications by retailers were rejected in 2012

This can enable them to release 20% of the value of their homes with no requirement to make monthly repayments and invest in their businesses.  By releasing equity from their homes in this way instead of taking on debt with monthly payment obligations, business owners improve their free cashflow.

Unlike a business loan, where the lender will typically conduct an in-depth assessment of the financial strength of the business, Castle Trust is primarily concerned with the equity a homeowner has in their residential property rather than the prospects of the business.

The other benefits of a business owner using the Partnership Mortgage include:
•    the stability of long term funding (term of up to 30 years)
•    no early repayment charges
•    no exposure to rising interest rates

Re-mortgaging through Castle Trust’s Partnership Mortgage, which is an equity loan solution only available through intermediaries, enables business owners to release 20% of the value of their home and only pay this back when they sell, or come to the end of the mortgage term. 

Because Castle Trust charges no rent or interest on their loan it  shares 40% of any profit on the sale of the property from the date when the Partnership Mortgage was taken out.  If the value of their home declines or stands still borrowers only repay the original loan amount with no interest at all.

New analysis (1) from Castle Trust reveals that some 8,131 applications for bank loans and overdrafts from privately-owned retailers worth an estimated £497.37 million were rejected in 2012.

For the UK as a whole, it estimates (2) that some 90,000 applications for bank loans and overdrafts from SMEs worth an estimated £5.6 billion were turned down in 2012.  On a daily basis, this equates to around 250 applications worth some £15.4 million.  

Some £24.5 billion was provided as funding, with the average application worth a staggering £61,173.

Sean Oldfield, Chief Executive Officer, Castle Trust said:

“Many businesses are finding it difficult to secure funding from banks at the moment, but a number have owners who have significant equity locked up in their homes. 

“For those who have been rejected for business funding or are unhappy about the cost, our Partnership Mortgage could be a solution for them.  It can provide a sizeable cash injection that does not need to be serviced or paid back until you sell your home or at the end of the mortgage term.  If the value of your home has not increased when you sell you’ve enjoyed an interest-free loan!

“Equity loans enable borrowers to raise money without having to increase their monthly repayments.  Because an equity loan is separate they don’t disturb an existing special mortgage deal they already have.”