Cash flow and mortgage security

A new year is for new beginnings, and if this is your year to get started in business, good for you! The
best advice for any start-up is: make sure your cash flow is managed well. One of the main reasons
businesses fold is that they run out of cash. But if you are smart about how you spend your start-up
capital and keep a close eye on your cash flow, disaster can be avoided.
Friday, 31 January 2020


Learning how to effectively manage your money can truly make or break a business, as cash is the
lifeblood of any venture. Controlling cash can be streamlined by bringing in technology to assist with
anything from accounting reconciliation to supplier management. Depending on the size and scope
of your operations, you can start off with a simple spreadsheet or better still, invest in an
appropriate software package.

For most businesses, experiencing unexpected highs and lows in sales is a reality, and both can have
a serious impact on your cash flow. If money becomes an issue, because you need to invest in new
equipment, hire more staff or involve a third-party supplier, for example, you could consider taking
out a business loan.

You can turn to your bank or see one of the many finance and lending companies for this, but do not
rush things as it is hugely important to get it right. If you’re thinking about purchasing assets or
expanding your business, or your business needs an overdraft to cover shortages, one thing is
certain - the lender will want security.

“If you own your own home, you may be able to borrow against it for the capital to buy or start up
the business or an overdraft for help with cash flow. If you can borrow against your house, you’ll be
able to get home loan interest rates rather than business rates and you may get a longer-term,”
explains Paula Lines, Business Law expert and Director of The Law Shop.

“A mortgage over a house is a more attractive option for a bank, as it’s usually easier for the bank to
sell a house if they need to rather than trying to sell business assets, which may not have a huge
amount of value outside that particular industry,” she says.

“Whether you can do this will depend on how much you already owe secured against the home. It
also puts your home at risk if your business fails, so you need to be absolutely sure that it is a good
option for you.”

Over the years, The Law Shop has worked with all major banks as well as specific business lenders.
Whatever your reasons for business borrowings, Paula and her team can help you with obtaining the
funds you need to keep your business thriving.

Call 0800 LAW SHOP if you would like to discuss your situation with the team. They understand the
securities that lenders require and can explain everything so you are fully aware of your options and
obligations, and understand all that’s involved.