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According to research by peer-to-peer lending group,, the average SME business owner has invested £22,700 of their own personal money into their business in the last year. And the study shows that 37% of those planning to raise money outside traditional bank borrowing will use their personal credit cards (despite standard interest rates typically being around 18.9%, and often much higher).

Many more will be borrowing from friends or family, or remortgaging or even selling their own homes. Now there’s nothing wrong with a business owner investing his or her own resources in their business. From the point of view of an external lender, it’s a clear demonstration of the owner’s commitment to, and faith in, the project. And if the funds are for genuine investment, expansion or growth, then it may well be a very good idea.

But according to Experian, 26% of those who had used their own personal finances to fund their business had done so to clear debts. If the investment is just to support losses or finance debts, then think very carefully. There’s no point in getting yourself into personal debt which won’t solve problems that may be more fundamental and deep-rooted. If a bank, or other traditional lender, won’t provide finance then there may be a very good reason for it. After all, banks are not in the business of losing money. To a large degree, that’s what got the country into a financial pickle!

If it’s your business, something you’ve worked very hard to build up, perhaps over many years, it’s understandable that you’re willing to do whatever it takes to make sure that it stays on track. But don’t throw good money after bad; don’t waste your own resources on a quick fix. Make sure that there’s a clear, realistic plan to repay the investment. Ask yourself whether the company has a viable future and, in the worst case, what would happen if the money could not be paid back. A business loan, with manageable repayments and all costs agreed up-front, should always be considered first. Protect your own personal finances.

At tri group our specialist team of experienced insolvency professionals has vast experience of businesses of all types and sizes, and of dealing with their financial problems from the most straightforward to the most complex. We will appraise the business, identify the key problems and discuss the available options in plain, jargon-free language – clear corporate recovery advice when you need it most. For us, winding up is always the last resort, and we’ll do everything we can to help you avoid it.