By Charlotte Beugge

Britain's small business owners are putting their own homes on the line in order to raise cash to support their businesses. 12% of owners have put their homes up as security to raise money in the last year, research from lender borro shows.

It found that a third of small businesses said they would use their home as a guarantee to raise money if they could not raise money by other means to pay for day-to-day business costs such as wages and to cover late payments from customers.

With secured loans - which are effectively second mortgages - the lender takes the home as a guarantee that repayments will be made. If the borrower defaults, then their home is at risk.

You can sometimes raise more on a secured loan than on a personal loan, which is not backed by a property guarantee.

Paul Aitken, chief executive officer of borro says: "Using your family home as a guarantee for a loan is a huge step for a small business owner and can be risky in this uncertain economic climate, but it seems many feel they have no other choice.

It's surprising to see that as many small business owners would consider applying for a secured loan as would apply for an unsecured loan or an overdraft, a sign that as banks continue to make it hard to access unsecured lending facilities, so those that require property as security become the next thing to turn to."

More than half of small business owners have used their savings to prop up their business and 17% have turned to families and friends for finance.