Borrowing large sums from a bank?

ro_G

Quick question for those of you knowledgeale in the processes of the banks here. I am looking to borrow about 35 grand from the bank (probably BOI) to put into a start-up business I will be working with so I have a few options:

Now, I am conscious of the fact that they may think a start-up is high risk and they may say no, and I probably fall between two 'categories' of lender which may be a problem.

So:

1. Do I tell them what it is for, based on the fact that I wouldn't have a problem paying it back over 3 years?

2. Do I tell them its for home improvements - if so, do I need collateral or security, or quotes for the work to be done? If i did borrow for home improvements and then signed it into a business account are they likely to check?

3. Their ususal limit is 25k for Personal Borrowing - will going over this limit make them think twice, even if it is no problem paying it back?

all advice greatfully appreciated, haven't a billies about personal banking loans.

Willie Wally

Where to start?

Banks like to see that you are putting your own money into the venture, if you are investing €100k and are looking for an additional €35k from them then it is much less of an issue than if you are looking for them to provide all your working capital.

You will need a bullet proof business plan (which really dont exist) and it also depends on the market you are going into. If it is something property related it is much easier than something software related.

If the business were to fail how would you pay the bank back, do you have any security or strong garuntors (spelling!!!!) who could cover the €35k if it were to fail.

The bank will look at the worst case situation always!

Another method would be to funding 2 ways
Personal insecured loan (€25k)
Company overdraft (€10K)

What about looking for investors? €35k is on the low scale for some business angels

ro_G

My income would be doubling in the start-up Willy, but I dont want to go through the business plan with them - we already have company account with AIB and factoring (invoice discounting) from Bank of America.

Theres a few hundred grand of capital going in - i just need to top up my cash input to match the other directors share capital. Hence I don't want to muddy the affairs with talking business plans etc. - it is essentially a few extra quid to top up my own equity injection

to save time, negotiations etc. is a home improvement loan the best bet, and if so, what info do they look for?

Willie Wally

AFAIK if you looking for 35k for home improvements you are really in small re-mortgage territory, your best bet might be 2x€17.5k HI loans 1 from BOI & 1 from One direct (or someone like that)

they will probably look for proof of ownership for the house but they are not likely to call around to see what you have done

Try the honest approach with the AIB if the companies account is there also, spread you bets really

ro_G

sound thinking Willy

RainyDay

Lying to the bank is not a great idea. You would be pretty pi$$ed if you found thatt they had directly and deliberately lied to you in relation to a loan, so treat them with the same respect you expect in return. Your family home has certain protections which you may undermine by telling them you are borrowing for home improvements and you end up putting the cash into a business.

If you do choose to do this, be conscious that you are putting your family home at risk for the sake of your new business. Don't kid yourself that reposessions don't happen or that your start-up won't collapse. Remember the small print - 'your home is at risk if you fail to keep up repayments....".

Startups are definitely high-risk situations. It would also be unusual for startups to be in a position to pay out high salaries in the early days, so make sure the business plan is sound. If you are putting a significant amount of money, pay out a few hundred quid for independent professional advice on the viability of your business plan.