borrowing One Mil

sundula

I am wondering has anyone got a rough idea of repayments on 1 million borrowed for building works for a small business and what kind of securtiy they would require ? Need a rough idea for a draft business plan before our AGM

Nuttzz

you'd need major asset backing, as well as some major cash flow

jayok

Well it depends on what you are borrowing the 1M for. If it's to buy a commercial property then you'll need at least 20% of the value and the bank will lend max the 80%. If it's to fund a new business venture banks won't really be interested (banks don't take risks).

In the event that they do lend, the directors will need to back the loan personally with their own assets (e.g. their homes). Also bear in mind on commercial loans the cost of interest is much higher than personal stuff. For example, our commercial property loan is ECB + 1.35% (tracker) this was the very best we could get. Expect ECB + 2%.

sundula

We hav a govt grant but we would need to raise about a mil ourself's - its for building works / new premises. We dont have any real assets in the business - even the land the current premises is built on is on a 99 year lease approx.

I was just trying to get a rough idea of monthly repayments on that kind of sum.

jayok

Well for commercial mortgages you are looking at about (just under) 5% at the moment (roughly). You'll get this over 15 years in most cases but you can push for 20 in rarer cases.

An interest only 5% on 1M is 50k pa or €4,167 pm, but if you are going for capital and interest (may not be the most tax efficient) you are looking at 10k pm for 1M over 10 years at 5%!

STaN

a good site for calculating mortgages/loans:

http://www.jeacle.ie/mortgage/