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• 28 May

  Are Personal Assets Required To Secure Invoice Financing

  Are Personal Assets Required To Secure Invoice Financing?

  In a word, NO. However, you should know about a few caveats that are explained below.

  Are Personal Assets Required To Secure Invoice Financing?

  When you apply for invoice financing, you are not normally required to provide any personal assets, such as your home or property, as security by giving say a fixed charge over your property.

  Have You Been Asked To Pledge Personal Assets Or Property?

  However, there may be extreme cases where personal assets have been used to enable a funder to offer to a company in a very difficult situation. If a funder has suggested this to you, let us see if there are alternative providers who will not require that type of security.

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  Giving A Personal Guarantee

  Most providers in the UK will require the directors of the company to sign a personal guarantee (PG). This is often for a limited amount but it does mean that your personal assets could be at risk in the event of a shortfall in the facility.

  Despite this generally accepted practice of asking for PGs, some providers will offer invoice finance without personal guarantees.

  Homeownership

  Another important aspect is that many providers now ask that one or all of the directors of a company be homeowners. Whilst this in itself does not directly pledge your property as security for the funding it could be at risk if you signed a personal guarantee as covered above.

  Often this requirement is more about making sure that the directors are committed to a particular address rather than seeking to take any value from their property. 

  Once again, not all funders require prime movers to be homeowners, some will provide invoice finance for non-homeowners.

  Summary Of Key Points

  So, in summary, whilst personal assets are not normally taken as direct security by a funder they can be at risk if you provide a PG. Not all funders require PGs but many will only deal with homeowning directors.

  Whatever your situation, there are funders that operate without these requirements that we can connect you with. 

  By Glenn Blackman