business loan

brianb10

is there such a thing as a business loan where loan repayments are paid out of the business profits or are all loans for business' personal loans taken out by the directors/shareholders?

Get Cracking

I think its personal,if the company is late with payments and you own the company ,its you they will be calling.
whats the biz?

TheCostumeShop.ie: Ronan

No not all loans are personal loans, however often banks will request that small companies have a guarantor as the banks know that many small businesses don't survive their first year.

Luke P

Hi guys, I was thinking of taking out a loan of approx under 200k. I have 10k in savings and could make it 20k. However I have no house and no mortgage and am currently renting.

Is there any where I could get a loan or do I have to get a house first or can anyone suggest ANY ideas? I'd rather not buy a house just yet as I want to wait to afford a really good house that I love and want to have a decent business running first!

Peterdalkey

for what? how would you repay it?

TheCostumeShop.ie: Ronan

I think you'd be hard pushed to get a 90% start up loan without guarantees. Assuming you are talking about a loan for businesses purposes, have you thought about a round of seed capital?

Luke P

It's to start up a new business yes.

I would pay it back with profits from the new business (would it be possible to work in a no payments until after 6 months clause??).

I also have a friend in the same position (financially etc.) in me who is interested in starting the business with me. He doesn't have 10k yet but he can save it up.

I'm not sure what a round of seed capital is!! I'm interested in all avenues of borrowing at the moment, trying to figure out what is the best option for me.

TheCostumeShop.ie: Ronan

Seed capital means getting investment at an early stage of a business for equity, ie. you give away a percentage of the business.

The bank is massively unlikely to give you a 90% 180,000 Euro loan unless you can prove to them you will be able to pay it back regardless of whether the business is a success or not.

Graham

It's probably worth mentioning what it is you're trying to finance?

Examples:
Property purchase/rental
Stock
Fit-out costs
Marketing
Advertising
Vehicles
Staff
Development costs

Luke P

Graham wrote: »

It's probably worth mentioning what it is you're trying to finance?

Examples:
Property purchase/rental
Stock
Fit-out costs
Marketing
Advertising
Vehicles
Staff
Development costs

All of the above!

Where would I even begin to look for a investor? (I wouldn't mind going down that avenue).

Also, Is it not possible to say that If it were to fail I could pay it back by getting a normal PAYE job? (I work in sales so the wages are decent enough and there are a lot of jobs too. Wouldn't be very difficult to get another job if it went belly up.)

Graham

Luke P wrote: »

All of the above!

Where would I even begin to look for a investor? (I wouldn't mind going down that avenue).

You'll probably need to be 'slightly' more specific than that if you're hoping an investor will get his/her chequebook out. :pac:

I'm sure you have all of that information already in your business plan, projected cashflow forecast/profit & loss/balance sheets etc etc etc etc.

Swampy

Seriously, there is no way a bank will give you even a fraction of that amount with out a very good business plan, good financial projections and a personal guarentee. Obviously the personal guarentee is useless if you have no assets to back it up.

Peterdalkey

You will have saved up the money long before such a prospect will have gained loan approval.

Luke P

@Graham, yes I have all of that prepared and looking quite good! All I really lack, Swampy, is the personal guarantee (only thing to my name is a 99 peugeot 206 haha). Could my friend not agree to take half the hit if the business goes down? He's in the same posistion financially as me and wants to be my partner. We both have experience in the field of our new business idea.

Is there nothing I could do without buying a house first? Really want to avoid that!

How would I even begin going about finding an investor...

lucky john

You mention a couple of times about buying a house assuming you can then use it as collateral for a business loan.
A house you borrow money to buy will be a liability to the getting a business loan. Its the equity in any asset you could (and thats not sure these days either) use as collateral.

As others said, you can assume no bank will lend money to you as it stands. The best of profitable trading businesses are struggling to get a loan these days.

Unless you have a very convincing business plan and/or a unique product you will find it difficult to get an investor on board. Also if you only have 10,000..20,000 stake of your own then his 180,000 investment means he will own 90% of your company. What an investor really wants is you to have far more at risk in the business than him/her.

Is there no way to start way smaller and with less of an instant need for 200,000? You have given no indication as to what you idea is. If you gave a small bit of info there are people on here that might be able to give you a lot of pointers (for free).

Luke P

Well the idea is to open a small stall in a very busy location (already chosen) that sells food/ice cream products that are very profitable. I have worked in a similar stall/shop for a while and see how profitable it can be! The 200,000 is a rough guess for the moment to be honest, I could probably start the business on 50,000 or so. But the building of the stall alone would cost at least 30,000.


So if I did get a house I would have to wait until I have a large portion of the house paid off until I can use it as collateral? (It's what I thought already, that's why I don't want to get a house!)

Luke P

I was hoping for 200,000 so that could see the business comfortable for the next 2 years and to ensure it's set up properly as oppose to cheap as possible!

Graham

If I were an investor I would hear that you are asking for an extra €150,000 of just in case/comfortable money?

Luke P

It's a small shop/stall in a very busy location selling food & beverage products (sounds unoriginal I know!) I have worked in a similar shop in a busy location and the profit they make is unbelievable!

I know they paid roughly €100,000 (about 5 years ago) to build their shop and I suppose I could do it for less.

Realistically I could probably get away with 60,000. So perhaps the best thing to do is take out a small first time CU loan of about €500. Then pay that off and take out a second CU of what I need! (That way I can take out a 3-4 times loan as oppose to just 2 times)

Luke P

I suppose I should get an actual price of building the stall!

rainbowdash

Luke P wrote: »

It's a small shop/stall in a very busy location selling food & beverage products (sounds unoriginal I know!) I have worked in a similar shop in a busy location and the profit they make is unbelievable!

I know they paid roughly €100,000 (about 5 years ago) to build their shop and I suppose I could do it for less.

Realistically I could probably get away with 60,000. So perhaps the best thing to do is take out a small first time CU loan of about €500. Then pay that off and take out a second CU of what I need! (That way I can take out a 3-4 times loan as oppose to just 2 times)

One minute you are telling us you have a detailed business plan that requires €200000 investment.

All of a sudden you will only need €60000.

Then you tell us you haven't even gotten a price for the stall, despite previously saying you have a decent business plan.

<Mod Snip>

Luke P

Ah here, leave it ouh. Just looking for a bit of advice/help! I'm a paranoid person, the 200,000 was only a reflection of that!

Luke P

Also, like I said, they paid 100,000 to build their shop so that was factored into my projections!

Graham

It's a fairly safe bet no investor is likely to give you €140,000 more than you need just to make you feel comfortable.

If that €140,000 includes salary/wages for you, it's even less likely.

Start thinking in terms of 'what's the minimum I need to get the business off the ground'. If it's €60,000 it sounds like you and your mate might already be one third of the way there.

Don't necessarily discount the negative posts in this thread, they may articulate what a potential investor is likely to think.

Your challenge now is:
1) Get the €60,000 figure down (can you build the stall yourself)
2) Get the €20,000 figure up
3) Rewrite your business plan taking into account 1) and 2).

Luke P

Thanks Graham and everyone else who helped!!

Yes I'll start asking around for quotes on the shop build etc. and do some new "tighter" projections.

Hopefully be able to get going in the next few months.

What are your ideas regarding the CU loan? I know for a first time loan they'll give double your savings. So should I take out a relatively small loan and pay it off in order to enable to get a second loan 3-4 times my savings?

Graham

I don't think it would necessarily be a bad thing to prove(improve) your creditworthiness while you develop your business plan. Loan repayments will be a burden to a new business though, be sure to take that into account in your projections.

Luke P

Will do, thanks again. Your help has been much appreciated.

lucky john

Luke P wrote: »

Well the idea is to open a small stall in a very busy location (already chosen) that sells food/ice cream products that are very profitable. I have worked in a similar stall/shop for a while and see how profitable it can be!

Luke P. Many people make the mistake of confusing turnover with profit. Working on a stall or in a shop thats taking in loads of cash tells you nothing about how profitable the business. Unless you can see the end of year accounts of the business then the days takings will tell you very little.

You seem like an ambitious young lad. If going down this road is what you really want then you need to go back to the drawing board and start at the begining. if you have a bit of free time, you could do worse than finding your local enterprise board and do a start your own business course. It wont cost much and will give you the bit of knowledge I think you need before you go ahead with you plan. You are not the first employee to see their boss rake in a load of money and think this is so easy anyone could do it.

Luke P

Thanks for the advice John, I have seen one of those courses and intend to attend soon

Swampy

+1 for the enterprise boards. They are great.

Back to building a stall for €100,000. You could build a house from the ground up for that money. Are you talking about a fit out? Are there assets that are very expensive?

Peterdalkey

This is a wind up, right? I admit I was taken in at first. Please tell me it is not a serious and genuine query.

Peter

In reality you won't get finance for a stall like this. If you want to get it started you need to be saving up enough money to rent it, or coming up with a clever way to do it on the cheap.

A bank may give you some money if - you match what they are putting up, you have been a customer for a long time, and you have further funds in the bank to cover the pay off of the loan if things go wrong. If you are short on one of those things your chance are pretty much zero.

A professional investor isn't going to take a punt on your business idea, as youve no sales and everything is theory, they really don't know when they would get a return.
Friends and family are your only alternatives for cash apart from what I said above. Figure out your costs instead of guestimating, and once they are done, figure out a way of making happen without relying on banks/venture capital

Digger69

Swampy wrote: »

Seriously, there is no way a bank will give you even a fraction of that amount with out a very good business plan, good financial projections and a personal guarentee. Obviously the personal guarentee is useless if you have no assets to back it up.

Before you borrow that kind of money for a business I think you should invest 15 euro on a book called "lean start up"

smeharg

Peterdalkey wrote: »

This is a wind up, right? I admit I was taken in at first. Please tell me it is not a serious and genuine query.

Peter

I had to check the date...thought we were back in 2006 with the banks throwing all these loans about :rolleyes:

bigneacy

I've sat slack-jawed reading through this! Is this for real?

First off - you say stall.... what exactly does that entail? Especially a €100,000 stall?

A quick look on done-deal gives me stalls from the market-trader type going for €300. To fully fitted permanent stalls w/running water & electrical hook-up for ca. €5000. with plenty of others in between....

Theres a lot of expertise on this forum - give a bit more detail and you'll get help. Don't worry nobody is going to steal your idea - if its that good they would have thought of it already.