3 Billion to be made available for SME's

http://www.independent.ie/business/irish/83643bn-loan-package-offers-a-lifeline-to-struggling-smes-2246268.html

Some good news for small business there.

If your thinking of applying to a bank I recommend a few things -

- Make a very detailed plan including at least 3 years of forecasts and costs. Even if you would be guessing the figures at 3 years, make the guess and put it in there.

- Ask for double the amount of money you actually want. From my experience they wouldnt give you the full amount you ask for. On both occasions I was successful in getting funds from banks I asked for double the amount I needed and ended up being approved for 60% of it.

- Give a good pitch to the bank manager. Make sure he/she believes in you and that you will make the business a success. They will tell you it just goes to the underwriter and they make the decision, but I dont believe that is the case, I think the loan officer/manager gives a lot of input into the final decision. They will give you objections so you need to be ready to deliver a passionate response to those.

-the bad news for a startup is that they will look at how much money you have put in already to the business. They want to see that your financially committed to it as well as them. They will want receipts to show what you have spent already.

- they will also push for a personal guarantee on the money, ie. its not just a company loan, if the business folds you will personally be paying off the loan. So bare that in mind if you think the business has a high chance of failing!

CandP

Thanks a million for the information and advice. Just what I was looking for.

fishy21

some good info there. Thanks for the tips as i will be applying to a bank for startup funds soon.

Duff Man Jr.

Good post. Re asking for double the amount, how can you do this without looking clueless. If you detail all the startup costs as totaling 50k, how do you explain asking for 100k?

Hard to say as it depends on the business. For example if theres marketing involved you could come up with a marketing campaign over X months that would cost X amount and add that to your figures. You could 'overestimate' the amount of staff required, and salaries. Theres a lot of things you could overestimate.
It does sound a bit dishonest, however if its the banks policy to give X percentage less then applied for, I think its just being clever and playing their game as opposed to being dishonest.
Its like insurance companies in the past who have a policy to automatically refuse all claims the first and second time they are applied for and then only act/review the third time. So to combat that you send them 3 separate letters at once for the same claim. Playing the game!

Mr Biz

If anyone is applying for start up funding ask your branch manager about EIBs (European Investment Bank) fund.
http://www.eib.europa.eu/projects/topics/sme/index.htm
BOI, AIB and Ulster Bank are administrators for the fund which is circa 2% above base. However, it's at the banks discretion whether to lend from EIB fund.

Has anyone been successful in funding lately versus a 2009 "No" from lenders? BOI in fairness have been more positive since government SME fund announcement. New business rate @ 4.9% AIB @ 4.4%