Debate: Amortization requirement affecting small – Dagens Industri

         
            Photo: Hasse Holmberg
         
       

 Yesterday wrote the Riksbank, the National Debt Office and Finansinspektionen a post in Dagens Nyheter on which they advocated a speedy adoption of the amortization requirements. You can not change the loan market for households without prejudice to the enterprise financing for small businesses, writes Örjan Hultaker, president of the Federation of Stockholm.
 

The proposals have so far designed as if it were two separate financial markets, one for home and one for business. It has ignored the relationship between housing and business financing.

The two surveys in November 2014, and in March 2015 interviewed Bucket private entrepreneurs and business leaders whose companies have at least one employee; a total of 1200 interviews. The weighted responses shows that one in five companies (19 percent) have ever taken out loans using their house as collateral to invest in my own business.

It is more common among companies with 1-49 employees (20 percent) than among larger companies (6 percent).

Those using his home for the financing of the companies got the information “FSA has proposed that the new mortgages must be amortized down to 50 percent. “Then the question was asked:” Would the repayment requirements have hampered or facilitated the financing of the company? Or had installment claims had no impact? “

For those who funded her own company with loans at home was two of five (41 percent) who felt that their funding would have hampered by the amortization requirements.

The conclusion is that you can not change the loan market for households without prejudice to the enterprise financing for small and family owned businesses.

In day big companies take bond and pay a low interest rate, in many cases 2 to 3 percent. The situation is quite different for smaller companies that even with a decent UC rating of 3 may have to pay about 10 percent of an overdraft facility, despite personal guarantees.

The same company can mortgage your housing and pay an interest rate of about 2 percent.

To not suffer from overly high funding choose because many business owners to mortgage the home and invest in their company.

There are regulations in Sweden that it should be impact assessments of how the new rules affect businesses before the rules are set. Regarding the proposals for amortization requirements, there are major flaws in the impact assessment. There is no analysis of how the repayment requirements affect the smaller family-owned companies that also otherwise have difficulty with financing.

Before the tie-back that is now being made with the amortization requirements is required impact analysis of the relationship between household borrowing and the family-owned business financing.

It is then important to distinguish between the security offered for a loan and what this loan will be used. There can hardly be a primary societal interest in limiting individuals’ investments in their companies. These investments do not affect a potential housing bubble.

The problem is particularly clear if the Government wants to ban a person who has a partially nedamorterat home loan using their home as collateral for a new loan to finance a business.

It should be noted that even a limitation of interest deduction should be consistency analyzed from a business perspective, especially if The Corporate Committee’s proposal would be implemented.

Orjan Hultaker, Chairman, Federation Stockholm