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Alternative lenders – is it a wise move?

By Ian Cooke

Assistant Insolvency Manager

BRI Business Recovery & Insolvency

THE BRI Business Recovery and Insolvency offices are experiencing a marked increase in queries from companies who have obtained loans from alternative lenders, taken out to assist them with their short term cash-flow issues and also for the payment of liabilities to HMRC that have built up over time.

These funds are generally sought by companies when traditional bank loans are unavailable. The majority of the time, no corporate security, such as a debenture, is obtained, with the onus being on a personal guarantee provided by the company director(s) and this may be secured on a second charge over their home.

There will always be a requirement for the alternative lending market and indeed, recently, their adverts can be seen on television promoting their services but I would urge caution and some due diligence before agreeing to the release of funds and the signing up to potentially onerous terms and conditions, which can put personal assets at risk.

A quick internet search reveals a plethora of companies and brokers offering their services in this market. It is, therefore, extremely easy to understand why, when a company is in financial difficulty, an application online with the promise of funds within 24 hours is appealing. However, this quick fix can come at a personal cost when, some months later, repayments are unable to be met and demand is made on the guarantee.

If you are a director of a company, or you act as professional advisor to a company that is contemplating funding from an alternative lender, then please contact BRI Business Recovery and Insolvency. There are various formal and informal recovery options available that do not necessarily require an unlimited personal guarantee to be provided.

BRI’s initial interviews are always free of charge, without obligation and in complete confidence. BRI pride themselves on providing the right advice first time, every time, regardless of any resulting fee. We are happy to meet to discuss matters and the offices are available between 9am and 5pm Monday to Friday.

BRI’s full contact details can be found at www.briuk.co.uk

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