Castle Trust will target smaller privately-owned retailers which are finding it difficult to secure funding by allowing them to release 20% of the value of their homes with no requirement to make monthly repayments so they can invest in their businesses.
Sean Oldfield, chief executive of 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!”
The equity loan enables the borrower to raise money without having to increase their monthly repayments and will not disturb any existing mortgage deal the borrower may have.
Castle Trust has reviewed analysis which states approximately 8131 business applications for loans and overdrafts by retailers were rejected in 2012 representing up to £497.37m.
For the UK as a whole it estimates that some 90,000 applications for bank loans and overdrafts from SMEs worth an estimated £5.6bn were turned down in 2012. On a daily basis this equates to around 250 applications worth some £15.4m.