What To Do When Bank Loans Aren’t An Option

by Paul Aitken, CEO and founder of  Borro

Business owners innately know that timing is everything. Opportunities arise, circumstances change, unforeseen events occur. Some things simply can’t wait to be addressed — or seized upon.

Yet when those situations involve the need for cash, financial institutions can be distant allies indeed. Banks often require strong balance sheets and steady income — the very luxuries entrepreneurs most often lack—before they will lend money.

It used to be that individuals wishing to borrow sizable amounts of money on short notice, aside from short-term business loans, were simply out of luck. But with the advent of personal asset loans, loans of $1,000 up to $1 million can be obtained in just a few days. The process is safe, fast, respectable, private — and very dependable.

Personal asset loans are executed by tapping into the value of major assets such as luxury cars, jewelry, fine art, precious metals, collectibles, antiques, even fine wines. Licensed appraisers determine the fair market value of the asset, after which an appropriate loan is made, often within a day or two. The asset is held by the lender until the borrower is ready to repay the loan and reclaim the item, usually in a matter of months.

Loans against personal assets have numerous advantages over selling. Most obvious, of course, is the elimination of the time and commissions involved in putting the item on the market. But importantly, most people who need cash also have no interest in losing their possessions. The goal is simply to temporarily turn a given asset into cash. With a loan, even the most prized possession isn’t gone; it is available once more as soon as the loan amount is repaid. Moreover, the owner avoids selling the asset quickly under “fire sale” circumstances, which might result in a significant loss of real value.

Another plus to personal asset loans is that they do not rely on, or impact, personal credit scores. Because the transaction is private, only the lender and borrower are involved and no details are reported to third-parties. If the loan is not repaid, the asset is liquidated to settle accounts (a circumstance that, it should be pointed out, happens very infrequently).

Interestingly, those who initiate a personal asset loan rarely do so because of a business downturn or other financial distress. Especially in today’s economy, opportunities arise with short lead times and only limited windows of participation. Individuals of means—many of whom have spent years building their net worth and whose wealth is tied up in stocks, real estate and various expensive possessions—need cash quickly in order to take part. Personal asset loans give them the flexibility they need to make the move, realize their financial gain, and repay the loan with profit left over.

Much has been made of the difficulty inherent in obtaining loans from commercial banks. Although entrepreneurs and small business owners are seen as primary initiators of economic growth, financial institutions for multiple reasons, are forced to limit their lending to these individuals. It’s a frustrating situation for all parties.

With personal asset lending, strong net worth individuals now have an avenue beyond banks, one that is fast, convenient and responsible. As with so many other aspects of the free enterprise system, innovation once again wins out — this time with an alternative that helps people achieve their financial goals, on their terms.

Paul Aitken founded Borro Limited in 2008 and serves as its Chief Executive Officer. Mr. Aitken served as Chief Operating Officer of Myriad Group AG from March 13, 2009 to July 23, 2009. He served as Chief Operating Officer of Purple Labs SA. He co-founded Movota Ltd. and served as its Chief Operating Officer.