new business

gerrycollins

hi everyone,

im possibly going to be in a position sometime next year to lease a retail unit fully set up brand new all mod cons (as they say)

here is my situation

Im selling the house and using the profit to fund this venture as its in a different part of the country to where i currently live

the profit im getting from the house is not enough to fully fund the venture as I will have to also fund my family for a few months while no money is been made.

what i need is about €75k having €25k so in total €100k, the €25k is after taking care of family from profit of sale of house

my main question is, will a bank fund a business loan for the above figures, based on a lease arrangement, where there is no assets other than a legally binding document

there are no other assets other than selling the car but will still leave me with a shortfall.

have asked the usual friends and family etc and would prefer to avoid that situation. any advice greatly appreciated

mick.fr

Why not keeping the house and ask for 100k at the bank ? At least you have some sort of assurance for them.

gerrycollins

mick.fr wrote:

Why not keeping the house and ask for 100k at the bank ? At least you have some sort of assurance for them.

well its in a different part of the country so selling the house is a forgone conclusion. As for retaining it, the profit made on the house will not be enough there is a shortfall

kluivert

Most banks will have business start up packages.

However they will normally require a business plan including financial forecasts for up to 5 years before they provide you with funds.

Can you try and noegotiate on the lease terms. Also read the lease carefully to make sure you are fimiliar with all the conditions.

Example who pays for the insurance. Is the person providing with the lease regsitered for Vat, if so they will charge you a fee which includes vat, a problem if your not regsitered for vat.
Repairs and maintenance, long term plans of the lessor for the unit etc, should also be worked out to see if you can reduce payments.

ircoha

gerrycollins wrote:

hi everyone,

im possibly going to be in a position sometime next year to lease a retail unit fully set up brand new all mod cons (as they say)

here is my situation

Im selling the house and using the profit to fund this venture as its in a different part of the country to where i currently live

the profit im getting from the house is not enough to fully fund the venture as I will have to also fund my family for a few months while no money is been made.

what i need is about €75k having €25k so in total €100k, the €25k is after taking care of family from profit of sale of house

my main question is, will a bank fund a business loan for the above figures, based on a lease arrangement, where there is no assets other than a legally binding document

there are no other assets other than selling the car but will still leave me with a shortfall.

have asked the usual friends and family etc and would prefer to avoid that situation. any advice greatly appreciated

Have u allowed for CGT on the profit on sale of house as it will be taxed since u are not re-investing the proceeds in another house.

U wont get 75k unsecured so u need an asset,
consider buying a house in the new location.

Also why a new unit etc etc?
one reason a lot of SME's go bust is that they over extend on the fixed overheads before the business produces cash.

minimise ur fixed costs.

can u start off in a garage attaxched to house?

gerrycollins

ircoha wrote:

Have u allowed for CGT on the profit on sale of house as it will be taxed since u are not re-investing the proceeds in another house.

U wont get 75k unsecured so u need an asset,
consider buying a house in the new location.

Also why a new unit etc etc?
one reason a lot of SME's go bust is that they over extend on the fixed overheads before the business produces cash.

minimise ur fixed costs.

can u start off in a garage attaxched to house?

CGT is not applicable to ones private residence

http://www.revenue.ie/index.htm?/revguide/capitalgainstax.htm

this is a retail venture so a new unit is what is been offered to me, but having looked into it a bit more looks like BOI do a franchisee loan(which is roughly what im at) but there was no mention in their publications on the need for secuirity from what i read anyways

banks wont use a private residance against a business loan it looks bad on a moraility side if they foreclose and chuck you out onto the street. I wont be able to afford a house and shop so will be renting house for a while hence I cant use the full profit from the sale of the house otherwise i could borrow from a mate the few € i would need

misterq

I think your running around in circles a bit.

From the sounds of things you will need some bank financing so sooner or later you will have to have a chat with your bank or better still, several banks.

Make an appointment with one or two to have an initial chat. Explain your circumstances and see what they would suggest. They will be able to offer some practical advice before you get too far ahead of yourself.

mick.fr

Anyway you put yourself too much at risk in my opinion. Selling all you got for setting up a biz is not...the smartest thing, no offense.

I know if you have a Business Plan etc you can get a certificate from Enterprise Ireland and then go to the tax office and can claim you last 3 years tax back (Employee taxes) to invest in a new business. The process is not easy but it worth it.
I know the money will be send by the tax office to the new company bank account and it has to be invested in assets/employees and such things.
I am not an expert but I know that exist. Give a call to Enterprise Ireland.

Good luck
And think twice, always cover your ass, especially when you got familly.
Plus if you set up a biz in another town that will not kill you. This is a bad for a good. And week ends will be even more intenses :-)

antoinolachtnai

Please try not to sell your only house in order to finance your start-up business.

You could see if there's any way to access the equity you have built up in your house. I know you feel you are going to have to sell anyway. But still.

I don't know anything about your circumstances, or about your house, but you will need to make a pretty big profit in your new business in order to cover the cost of buying into the housing market again in the future.

Personally, I think you should try to find another person who is willing to split at least the financial risk with you. If you can't find such a person, you should be asking yourself whether you are really on the right track.

Startup in a brand new unit in retail can be pretty tough. It can be a long time before the customers start coming to the new area.

In general terms, I don't think EUR 75k is really enough to start a retail venture. If it is a very small unit, is it really ever be big enough to be worthwhile? If it is any bigger, you will have to factor in staff. 75k is only enough to keep two employees going for a couple of months. Presumably some of your money will be tied up in key money, stock and equipment too.

Best of luck with your new business, I hope it all works out for you.

Antoin.

stepbar

gerrycollins wrote:

hi everyone,

im possibly going to be in a position sometime next year to lease a retail unit fully set up brand new all mod cons (as they say)

here is my situation

Im selling the house and using the profit to fund this venture as its in a different part of the country to where i currently live

the profit im getting from the house is not enough to fully fund the venture as I will have to also fund my family for a few months while no money is been made.

what i need is about €75k having €25k so in total €100k, the €25k is after taking care of family from profit of sale of house

my main question is, will a bank fund a business loan for the above figures, based on a lease arrangement, where there is no assets other than a legally binding document

there are no other assets other than selling the car but will still leave me with a shortfall.

have asked the usual friends and family etc and would prefer to avoid that situation. any advice greatly appreciated

BOI can offer up to 100k unsecured on a business loan, however you would want to have all eventualities covered, i.e a proper business plan, cash flow for the first 2-3 years, lease agreement in place. Although the loan would be unsecured, the bank would have to be fairly sure that it would be paid back and that you have budgeted for most eventualities.

First piece of advice..... PLEASE DO NOT SELL YOUR HOUSE!!!!!! Absolute madness, definatly not the way to fund your business. Equity release can end in tears also if it is not carefully managed. Can I ask how are you going to run this business? As a Sole trader, Ltd company, Franchise??? and what part of the country it this business in? Is it far from your PDH?

Second piece of advice call into your local BOI, we have one of the best starter business loans going. You could call into my branch but you would be better goin to your local (in D24?? ) where you have an existing relationship. I could'nt advise (because I'm not QFA qualified) you but if you told me what branch of BOI (maybe I'm making a big assumption) you bank with I could perhaps get someone to call you.

BTW how much are you paying for the lease? Have you got it valued on the open market / by another auctioneer? Is it guarenteed to be worth x amount in 5-10 yrs time?

stepbar

mick.fr wrote:

Anyway you put yourself too much at risk in my opinion. Selling all you got for setting up a biz is not...the smartest thing, no offense.

I know if you have a Business Plan etc you can get a certificate from Enterprise Ireland and then go to the tax office and can claim you last 3 years tax back (Employee taxes) to invest in a new business. The process is not easy but it worth it.
I know the money will be send by the tax office to the new company bank account and it has to be invested in assets/employees and such things.
I am not an expert but I know that exist. Give a call to Enterprise Ireland.

Good luck
And think twice, always cover your ass, especially when you got familly.
Plus if you set up a biz in another town that will not kill you. This is a bad for a good. And week ends will be even more intenses :-)

Enterprise Ireland wont even look at you unless its a high potential business i.e one that could reach 1.5m in 3 yrs (I think), but it def has to be high potential.

SouperComputer

Although I dont know the specifics of your business plan, based on my experience 100K is nowhere near enough to sucessfully fund a retail shop. Also from that standpoint I think you would be taking a major gamble selling your home. Then again given the way the market is, it might be a shrewd idea

What have you factored into your budget? Have you accounted for little or no business for the first six months, maybe beyond that? Remember that you need to pay yourself too!

Sit down, draw up a plan. Well, actually you will need three: worst, possible and best case sceanrios. Remember to factor in inflation (energy and intrest for a start) and be sure to focus on retained profit for expansion. Work out what your startup capital is (going by worst case scenario). So you will need funding for a year (or more!) running expenses: rent, heat, elec, wages, repairs, motor expenses, accounting, insuarance and marketing etc in addition to your startup costs and purchases such as equipment and stock.

Present this plan to investors. If you find you just cant make the plan lucrative enough, then its quite possibly not worth doing.

It would be great if you could give us more info to go on.

gerrycollins

the best info I can give without giving too much away is the business plan is done as worst case scenario and it still looks good. it covers the first 6 years of the business and covers expected rises in the usual things.

sadly i have no option in selling my house as it is too much of a hassel. ill be moving to the other side of the country so to the cost to upkeep the house rented by god knows who through an agency is not the stress i want to have with a start up business under my backside

stepbar

Seriously I wouldnt sell the house for a number of reasons:

A) To get back in could cost more in years to come
Your business might not be a successful as planned
C) You shouldnt really have to for the level of borrowing you are looking for, as ive said BOI offer lending up to 100k unsecured.
D) You risk the danger of over investing in the business. It maybe tempting to stick the proceeds of the house in the business. This would be the wrong attidute to take. Let the bank take the risk. If it works great, if it doesnt you can walk away.

I would just rent out the house, in fairness there are plenty of people who have investment properties all over the place and still run their own businesses. Any good property management company is worth their weight in gold and shouldnt need to hassle you. Usually they will handle the entire relationship between tenant and landlord, so it might not be as much hassle as you think.

antoinolachtnai

'Worst case' projections are all very well for talking to the bank and your investors and all the rest of it, but really, you could end up not doing any business or not making any money for months or even years. If you're a family man, you're going to have to make sure you have a plan for not being destitute if you run into problems.

Please, talk to a lot of people in business before you go ahead with this.