According to data, only two out of ten young people prefer to start their own company to work for others. Difficult access to financing is the main reason why they do not think about being self-employed in the future. However, although accessing loans is difficult when we do not have sufficient and regular income, it is not impossible to get the money we need.

If we are thinking about starting a business and we have a home owned or with 80% of the mortgage paid, mortgage loans can be a way to obtain loans for SMEs.

SME loans of up to $ 300,000 to boost your business

SME loans of up to $ 300,000 to boost your business

In the market there are loans with a mortgage guarantee that we can access if we have a home without charges or in its last years of mortgage. These are credit products that have more flexible requirements when applying for them. For example, the lender does not usually ask us for a high income since, instead of our salary, we are providing our home as a guarantee of payment, which has a much higher amount. For the same reason, neither will a guarantor ask us to be responsible for the monthly payments in the event that we do not have sufficient financial capacity to meet the payments.

Another of the strengths of home equity loans is that we can request a much longer repayment term than other loans. The period to return the financing can be extended up to 20 years, which will reduce the amount of the installments. However, more time paying monthly payments will also mean a higher interest cost.

The lender will make a valuation of the house from which will establish the maximum amount that we will be able to access. In this type of loan for SMEs, the maximum capital to which we will choose will be 40% of the result of the appraisal of the property. A criterion that we must take into account if we want to obtain a high quantity and that, therefore, will also depend on the characteristics of the residence.

A credit product to contract with great responsibility

A credit product to contract with great responsibility

One aspect to keep in mind is that these are credit products that we must contract responsibly. We are providing our own home as a guarantee of payment, so we must commit to meeting the credit repayment installments within the term established in our contract.

Failure to return the monthly payments on time will cause us to be late and, ultimately, the lender may even execute an embargo order. Therefore, it is advisable to choose an adequate capital for the project that we are going to develop and a term that allows us to face comfortable monthly payments. If we put this into practice, we will be able to give the boost that our business needs and, in addition, make the most of these loans for SMEs.