The Quick And Cost Effective Way To Inject Money Into Your Business
If banks won’t lend, use this strategy to access this little-known source of interest-free funding.
If you made this up, people would think you’re mad.
Primarily, it was the banks’ cavalier attitude to lending that caused the 2008 credit crunch. And once that desperate news was out, Governments around the world pledged trillions-worth of taxpayers money to prevent those banks from going bust. Between them, the banks received huge injections of cash, to lend to business, to stimulate recovery and growth.
But they haven’t lent in anything like the amounts they promised.
They claim they now need to lend prudently, because look at the mess that resulted in the past when they didn’t. They’ve introduced such tight lending policies, it’s akin to getting blood out of a stone. And because they’re so cautious, as a direct result of their irresponsible behaviour of the past, their bad debts are now massively reduced. And that enables the bankers to pay themselves horrendously huge bonuses. With cash we’ve given them!
Quite frankly, it’s outrageous!
It’s never been so difficult for business to borrow.
In these bank-induced times of austerity, banks are simply not providing what business needs. Funding for establishment, cashflow and expansion, so we can work our way out of recession.
If you’re fortunate enough to be offered a facility, chances are it’ll come at a penal interest rate. The fees and charges attached to the borrowing will escalate its true cost. And invariably, you’ll be required to provide further security on a personal or business basis, before you see a single penny.
Talk about ‘belt and braces’.
And if you’re one of the lucky ones, your bank is likely to keep such a close eye on you and your business, it’ll feel like you can’t even cough without its permission.
Forget the bank – you can become the banker for your business.
“But I don’t have that sort of money” I hear you say.
Well, unless you’ve checked, you might be surprised. You see, throughout your working life, it’s possible you could have been part of one or more company pension schemes. You may have saved in a personal pension, a stakeholder pension, or perhaps you saved some additional voluntary contributions alongside your employer’s scheme. It possible you contracted out of the State Pension, SERPS, having some of your National Insurance Contributions redirected to a pension in your name.
Together, it could add up to a sizeable pension fund.
You could use pension release to draw tax free cash, and once it’s in your hands, you could lend it to your business.
Like any loan, you need to agree the terms. And that includes the interest rate you’re going to charge.
If you were being incredibly generous to your business, you could literally make the loan ‘interest-free’. And whilst the business would, of course, have the greatest chance to prosper, your ultimate retirement income is bound to suffer. After all, you’ve drawn out a pile of cash from your pension fund, which won’t be there to draw upon when you want to stop work.
The better option is for your business to make an ‘interest payment’ to your pension. That way, your pension continues to build.
In recent years, the average pension fund has grown by just 3% to 5%, so it wouldn’t cost the business much if you decided to set up your loan at this rate.
The tax free cash you’ll have drawn through pension release will be invested in your business, which hopefully will increase its value as a result. And your pension fund will continue to grow through the ‘business loan repayments’.
Of course, if you really want to do it properly, you should set the interest rate as the same level your bank would charge your business, assuming it would lend in the first place! It’s bound to be much higher than 3% to 5%, and that would go a long way towards producing a decent retirement fund for you.
Pension release for business investment really puts you in control.
No longer will you be at the mercy of the banks. You can set the interest, to suit both your business and your pension fund. And you can vary the terms whenever you wish.
But perhaps the greatest benefit is the satisfaction you’ll have in knowing you’re not propping up the banks’ profits and the bankers’ bonuses, at the expense of your business.
Your pension fund really could be your business saviour.
At a time when banks are more interested in their balance sheets than yours, pension release is certainly well worth exploring. Nonetheless, it needs careful consideration.
If you transfer part of your pension fund through pension release into a business that’s unlikely to succeed, or it won’t increase the business value appreciably, you could well be worse off. And if the business fails, your future will be much less rosy.
So before you draw the cash through pension release, you should review all your pension funds with an independent pension specialist. It’s vital you check whether any of your pensions qualify for attractive guarantees or benefits, which you’d lose if you take pension release, for that could end up being a really bad move.
Complete the form above to see how much tax free cash you could get using pension release.
If you’re a commercial business agent, you could do more business by helping your clients release cash from their pensions »