Making your home the collateral for a business loan

[Alexandoy]

Would you agree to make your home a collateral for a business loan? When a friend started his business of recruiting worker for Cyprus, the earnings was pretty good because of the high commission that my friend gets. In order to expand his business he rented a big house to be the office of his recruitment agency.

A bank loan was secured for the expenses in the business expansion. The collateral was their family home. Unfortunately after a year of good operation a snag hit the business and the collateral was in danger of being repossessed by the bank. Fortunate a brother rescued the financial problem that the house was saved. That is another lesson in finance that it is a big risk for your home to be the collateral for a loan.

 

[Abigael]

Wow, that is such a huge risk indeed. Putting your family home as collateral for a business loan is rather careless in my opinion. If the business does not work out, your whole family will feel the impact by loosing a home. It is better to put other things like a car or furniture as collateral.

 

[Mika]

I would never use my home as collateral for a business loan. Home is your personal asset, and you should never use your home for a business loan. What if your business fails and you will have to transfer your home to the bank? You will be homeless in that case. I think a better idea would be inviting new partners or looking for investors