Getting Pressured to Repay "Bank of Mum and Dad" Loans?
Issue 029
A recent report by the Australian government’s Small Business Ombudsman, Kate Carnell, indicated that more than 25% of small and medium enterprise loans are being funded by the parents of small and medium enterprise owners.
The “Bank of Mum and Dad” is being forced to fund a significant amount of the loans to small and medium enterprises because of the credit crunch which has been worsened by the fallout from the Banking Royal Commission, Kate Carnell was reported as saying in a recent article in the “Financial Review”. (Click here).
“Falling residential property prices are compelling the difficulty in borrowing, because most lenders require small and medium enterprise owners/shareholders to put up their houses as collateral”.
If you have borrowed for your business from the “Bank of Mum and Dad”, you may be noticing some subtle pressure for the repayment of the loans, because your parents wish to retire or there could be a requirement to find money to finance admission to a nursing home. If this is happening, you could be interested in the new opportunities for small proprietary companies to raise capital from the public with part of the capital raised being utilised by your company to repay the loans from the “Bank of Mum and Dad”.
The basic requirements to raise up to $5 million in a 12 month period are:
- group sales under $25 million per annum
- group gross assets valued at less than $25 million
- neither the company, nor any of its associated entities, are listed on a stock exchange anywhere in the world
You can find more information by visiting the ESS Small Business' website - Crowd Sourced Funding, where we have a range of material (some complimentary and others for a fee) to assist company directors, management and shareholders to gain an understanding of how Crowd Sourced Funding Equity Raising operates.
If you have any questions, please do not hesitate to send me an email: peter@essbiztools.com.au or Telephone me on 1800 232 088
Have a great day!
