Tag Archive | "mortgages"

Slight increase in SME funding but it’s still not enough


The SME community is still having problems raising funding and at the same time has to cope with increased costs, Adam Tyler, the chief executive of the National Association of Commercial Finance Brokers, said recently.

The latest survey from the NACFB shows that although funding has improved slightly, it is still very difficult for SMEs, including accountants for contractors looking to grow, to access. Funding is now coming in a variety of different ways and from a wider range of lenders, he said.

In the past twelve months, there has been a 3.5% increase in asset finance and a rise of slightly over 6% in commercial and sme mortgages. But short-term lending shot up by a massive 180% over the past year. Asset finance brokers have been struggling to find funders, but more smaller lessors have entered the market.

The number of companies using invoice finance increased for the fourth year in succession and this shows that businesses are looking for more cost effective ways of borrowing. Although 90% of small firms bank with the four major high street names, they are looking to alternative sources when it comes to borrowing.

Members of the NACFB have access to nearly 70 providers of business finance, Tyler explained. Companies do want to grow and they do want to borrow and yet a recent survey shows that only 16% of SMEs have asked their banks for funding, and of those, one third were refused.

David Connell from the Cambridge Judge Business School says that the government treats small businesses as an afterthought when allocating innovation funding and it should adopt a similar system to the US where projects receive 100% funding.

He explained that the 50% of costs allocation given to small firms isn’t appropriate as they are cash poor and lacking in venture capital.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Autumn leaves at the top of the weir by Steve-h

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Don’t rely on your home to fund your retirement


The government wants to see the housing market depressed in order to make it easier for first time buyers to buy a property.

Experts have already predicted that house prices will fall this year by between 6% and 10% and homeowners are being warned that they should not expect to fund their retirement by releasing home equity.

Councils and property developers will be encouraged to construct more homes, which will depress the market and help first-time buyers.

On Monday, Grant Shapps, the housing minister, said that property should be regarded as somewhere to live rather than an investment. He wants to see a rational housing market where property prices rose by less than salaries. If property values were to fall in real terms this would benefit the millions of young people who are currently unable to afford to buy, he added.

Shapps pointed out that it was crazy for housing to be so unaffordable and that past scenarios whereby house prices boomed over a short period of time was unhelpful.

This may seem hypocritical coming from a man who is thought of as an astute property speculator. He profited by £250,000 on one property deal and his current five-bedroomed home would realise over £1 million if sold.

Whilst it might benefit first-time buyers to have a rational housing market, homeowners who were relying on home equity to fund their retirement will not welcome the move. They have already seen their pension funds severely eroded by the economic crisis.

Homeowners now have to remain in their properties for longer than ever, according to new figures from the CML. They now spend nearly double the length of time in their current home before putting it up for sale compared to the beginning of the recession. In 2007, people stayed about 11 years in a property; now it is 21.5 years.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Bird Houses / 20071230.10D.46705 / SML by See-ming Lee ??? SML

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Contractor accountants need a financial contingency plan


Contractor accountants and other professional freelancers must be prepared for financial changes, especially in these times of economic uncertainty.

The MD of the Debt Advice Foundation, David Rodger, said that everybody should have a Plan B, even if they believe their job is secure.

Rodger pointed out that redundancy might have a massive financial impact on a person’s household budget so having the foresight to plan ahead can lessen the chance of future difficulties.

This is simple to do, he says. Set yourself a realistic budget so that you do not overstretch your finances or spend large amounts on credit and keep a “rainy day” fund to tide you over if you have the misfortune to lose your job.

Contractor accountants working through umbrella companies might find that they are in and out of work due to the nature of freelancing. It is therefore vital for them to have a reserve cash fund in case work dries up for several weeks at a time.

The threat of more job cuts in 2011, coupled with the increase in VAT, could mean that more people fall into financial difficulties. The Money Advice Trust has already forecast that the number of people seeking advice on debt is going to reach a record high soon. Surprisingly, only around 16% of people who currently have money troubles seek advice.

However, consumers are showing signs of concern when it comes to debt, according to quarter four data from R3. 47% are worried about their credit card debt, 28% about their overdraft and 23% are concerned about meeting mortgage repayments.

Last week, the government launched a consultation into the regulation of consumer credit. It wants to transfer the responsibility from the OFT to a new authority; the consumer protection and markets authority. The government hopes this would provide more protection for consumers and remove regulatory burdens on businesses.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: In the shadows by Tyla’75

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