Business plan for a loan

390kid

Hello all. I'm just wondering how to go about drawing up a official looking business plan to help get finance to buy some land? I've only got sucklers and sheep so is that already ruled out with the current returns in it?

Signpost

Was at a walk where some lad from AIB gave a speil on how we should all be filling out this booklet regardless of wanting a loan and having it ready if the need arose where we did need one - https://business.aib.ie/content/dam/aib/business/docs/my-business-is/Agri-Matters/Teagasc-Business-Planning-Workbook.pdf
My personal opinion is its a bit of a load of horse but probably asks a few of the important questions alright.

Wouldn't say its ruled out. If you know what you want to borrow (a) & how long you want to pay it back over (b) then you know how much you need to repay per year (c). If a + b doesnt = c, your going to need a fancy business plan but prob only putting yourself under pressure.
If a + b = c or = c with a profit then you shouldn't have too many problems if your figures are realistic. I'd talk to the local bank once you know your own ideas and see what they say to you first off.

Sam Kade

Most farmers rarely follow the plan and the banks don't care once they get their money. Once you have realistic figures and show that you can make the repayments you should have no problem.

mahoney_j

Banks aren't too worried about business plans profit monitors etc ,the bottom line for them is repayment capacity and wether it's there or not

Timmaay

mahoney_j wrote: »

Banks aren't too worried about business plans profit monitors etc ,the bottom line for them is repayment capacity and wether it's there or not

Yep, they don't care in the slightest if the farm is a total moneypit once say the wife's wage and sfp help balance up the books ha.

kerry cow

All they want is their money guaranteed and same back in intetest

390kid

Well thanks for that! Been wrecking me head all Christmas to see what sh1t I could have to put into 1. Think I'll use it as a last resort so. Can yous tell me the process of actually buying a bit of ground

Bass Reeves

The problem with business plans and accounts is that most bank staff cannot understand them. Take accounts. On paper you could be losing money. There may be for instance a lot of capital allowances being used up after infractured dvelopment or you may be paying wages to you children working on the farm. There seems to be an inability in banjos nowadays to look behind the accounts.

Has this lad borrowed before. How much did he borrow. Did he make the repayments on time. Having a wife working or working yourself and having payment ability has nothing to do with having the ability to pay. Remember a friend going to a bank manager 15 years ago he went trough the accounts with the manager. Showed him capital expenditure that would not be repeated, capital allowances that were in play for next 4_8 years. His wages the other half wages and explained to bank manager that at present any profit was taxed at over 50% so it was in his interest to keep spending high. He got his loan. Banks no longer have local bank management that can lend large amounts. Nowadays you have to deal with account managers that have no idea of your history or your ability to pay back money.

I remember a story told to me a long time ago. It was about 50_ 60 years ago. Two salesmen were in a car sales room when two lads came in one customer was in a new suit and patent shoes in his 30's. Other customer was an old man in his 70 ' s an old farmer that both knew could not drive . The older salesman gave the younger sales man the choice of customers. He promptly choose the lad within the patent shoes. ' Wrong choice' said the older salesman heading for the the old man.
The younger salesman spend over had an hour kicking tyres with the patent shoes dude. He went back into the salesroom to find out the old the other lad had sold two new Ford Popular's to the old man. His wife had two nephews that were being ordained in the next 3-4 weeks.

You might say what has this to do with lending money. What it has to do with it is that all lending is now impersonel. Banks insistence on business plans etc is judging every book by it's cover. This is ok when lending to those in a company structure where profit and loss is a bit more transparent and where often a personal guarantee can address any other issues. However in busines lending to sole traders banks no longer have the ability to sort wheat from the chaff.

This is the reason we will have banking crashes every 15- 20 years as lending policy will be dominated by lending matrix's and by account analysis that most cannot understanding

jaymla627

Bass Reeves wrote: »

The problem with business plans and accounts is that most bank staff cannot understand them. Take accounts. On paper you could be losing money. There may be for instance a lot of capital allowances being used up after infractured dvelopment or you may be paying wages to you children working on the farm. There seems to be an inability in banjos nowadays to look behind the accounts.


Has this lad borrowed before. How much did he borrow. Did he make the repayments on time. Having a wife working or working yourself and having payment ability has nothing to do with having the ability to pay. Remember a friend going to a bank manager 15 years ago he went trough the accounts with the manager. Showed him capital expenditure that would not be repeated, capital allowances that were in play for next 4_8 years. His wages the other half wages and explained to bank manager that at present any profit was taxed at over 50% so it was in his interest to keep spending high. He got his loan. Banks no longer have local bank management that can lend large amounts. Nowadays you have to deal with account managers that have no idea of your history or your ability to pay back money.

I remember a story told to me a long time ago. It was about 50_ 60 years ago. Two salesmen were in a car sales room when two lads came in one customer was in a new suit and patent shoes in his 30's. Other customer was an old man in his 70 ' s an old farmer that both knew could not drive . The older salesman gave the younger sales man the choice of customers. He promptly choose the lad within the patent shoes. ' Wrong choice' said the older salesman heading for the the old man.
The younger salesman spend over had an hour kicking tyres with the patent shoes dude. He went back into the salesroom to find out the old the other lad had sold two new Ford Popular's to the old man. His wife had two nephews that were being ordained in the next 3-4 weeks.

You might say what has this to do with lending money. What it has to do with it is that all lending is now impersonel. Banks insistence on business plans etc is judging every book by it's cover. This is ok when lending to those in a company structure where profit and loss is a bit more transparent and where often a personal guarantee can address any other issues. However in busines lending to sole traders banks no longer have the ability to sort wheat from the chaff.

This is the reason we will have banking crashes every 15- 20 years as lending policy will be dominated by lending matrix's and by account analysis that most cannot understanding

Watched the film the big short over Xmas, and it was scarcely beliveable what banks where at leading up to the economic crash, greed and the chance to make a quick buck instead of opting the slow steady and pragmatic approach to lending are the order of the day and whatever the latest software programs that are telling the head guys how to make their fortunes are taken as gospel.....
You have to laugh at the situation that's going to unfold again in Ireland where the government has opened the floodgates for new mortgage approvals and the boom/bust cycle is going to start the merry go round again

390kid

Surely to jaysus there's been some lessons learned from the last time? Or is that just utter greenness on my part. I can't say much on what the boom was like the last cycle as I left school at the start of the bust

dar31

OP, if you want the money,do a business plan. If you want to go through the motions and like the notion of buying a but of land then don't do one. The bank will put an end to it for you.
Put you best foot forward.

Who2

Having the profit monitor and plan done will show your serious they mightn't know what their reading but it shows that you know what your at. Your going to be messed around a bit so book appointments with a few banks. How long will these take to put together anyways. The amount of work they will take will be tiny in comparison to the amount the of work the ground is going to take to pay for itself.

Bass Reeves

390kid wrote: »

Surely to jaysus there's been some lessons learned from the last time? Or is that just utter greenness on my part. I can't say much on what the boom was like the last cycle as I left school at the start of the bust

Truth is nothing has been learned within the banking sector. Wages at the higher level are still bonus dominated. This trickles down to the lower levels. Give it another few years and some one will reinvent the circle and throw money at some new fad, idea or industry. How long before we have an internet value crash, or a dairy/food sector bubble. It is only a matter of time. Too much money in the financial sector that is controlled by individuals that it is not belong to in pension funds, too many people looking for that above average return without having to work for it.

mahoney_j

Who2 wrote: »

Having the profit monitor and plan done will show your serious they mightn't know what their reading but it shows that you know what your at. Your going to be messed around a bit so book appointments with a few banks. How long will these take to put together anyways. The amount of work they will take will be tiny in comparison to the amount the of work the ground is going to take to pay for itself.

I applied for and got loan for cubicles etc last year ,I was asked for
1 3 years accounts
2 tax clearance
3 coatings for project
4 stock nos
I had pm complete but didn't submit as wasn't asked for.loan was stres tested at low milk price of 27 cent I think.

jaymla627

Bass Reeves wrote: »

Truth is nothing has been learned within the banking sector. Wages at the higher level are still bonus dominated. This trickles down to the lower levels. Give it another few years and some one will reinvent the circle and throw money at some new fad, idea or industry. How long before we have an internet value crash, or a dairy/food sector bubble. It is only a matter of time. Too much money in the financial sector that is controlled by individuals that it is not belong to in pension funds, too many people looking for that above average return without having to work for it.

In america the next house of cards to come down will be the car market, theirs over a trillion dollars of outstanding loans at the minute and over 20% are already in default, it seems sub-prime lenders out their swithed over to try making a killing on this market......
Even in Ireland finance packages where the final payment on cars is nearly 50% of purchase value on all these new shiny adds being broadcasted about owning a bmw for just 300 euros a month is dodgey to say the least where people are ment to be able to pull 15-20 grand from at the end of the lease is a pretty hefty undertaking

dar31

mahoney_j wrote: »

I applied for and got loan for cubicles etc last year ,I was asked for
1 3 years accounts
2 tax clearance
3 coatings for project
4 stock nos
I had pm complete but didn't submit as wasn't asked for.loan was stres tested at low milk price of 27 cent I think.

Same here.
Also asked for
3 yrs coop performance reports
6 mts bank and credit card statements
Profit monitors.
Even asked for agri net report on tons grass grow for year.
Getting approval was the easy part. Getting money drawn down took a bit of time.

whelan2

dar31 wrote: »

Same here.
Also asked for
3 yrs coop performance reports
6 mts bank and credit card statements
Profit monitors.
Even asked for agri net report on tons grass grow for year.
Getting approval was the easy part. Getting money drawn down took a bit of time.

What bank was that?

Who2

mahoney_j wrote: »

I applied for and got loan for cubicles etc last year ,I was asked for
1 3 years accounts
2 tax clearance
3 coatings for project
4 stock nos
I had pm complete but didn't submit as wasn't asked for.loan was stres tested at low milk price of 27 cent I think.

A loan for cubicles and one for land is two different things, I'd try to have every eventuality covered and reread so no matter what happens your covered and you have the right answers.

whelan2

Have to apply for a loan this year, borrowings are very low at the minute. Have 2 options to apply for
1. new cubicle shed for 200 cows
or new cubicle shed and new parlour
I am with 2 banks, no real problems with either. The other thing is is the grant worth waiting for ? Hearing stories of ages waiting for application to go through.I have loads of slurry storage so just sheds and parlour

ted_182

Assuming you would be building circa 24 unit parlour for 200 cows then you could apply for grant on the machine only, that would probably take care of the 40/60% of 80000 that you can claim

Mooooo

Apply for planning anyway first off. Perhaps contact advisor and check it out re time frames. If it's there may as well go for it, it'll all help. Bank here looked for 3 years accounts, coop performance reports and called out to have a look at the place. Took a while to get approval, was for land purchase. A lot of messing with them but at the end of the day it's security and repayment capacity they want. I may not have had the history of others so perhaps that was why it took a while for me, not a mind a change in business managers halfway through the application, alltho in fairness the girl that came in was very good, pity she left again not long after

whelan2

Mooooo wrote: »

Apply for planning anyway first off. Perhaps contact advisor and check it out re time frames. If it's there may as well go for it, it'll all help. Bank here looked for 3 years accounts, coop performance reports and called out to have a look at the place. Took a while to get approval, was for land purchase. A lot of messing with them but at the end of the day it's security and repayment capacity they want. I may not have had the history of others so perhaps that was why it took a while for me, not a mind a change in business managers halfway through the application, alltho in fairness the girl that came in was very good, pity she left again not long after

Teagasc man has been out, will have milking machine man, local builder out in a few weeks

dar31

whelan2 wrote: »

Teagasc man has been out, will have milking machine man, local builder out in a few weeks

If you doing a big job, get a proper design drawn up by professionals. Will only cost a small % of over all costs.
Getting to the end of job here 200 cubicles and parlour..... best advise I can give you is to add a 20-30 % contingency to your final costings, you'll need evert bit of it

Timmaay

ted_182 wrote: »

Assuming you would be building circa 24 unit parlour for 200 cows then you could apply for grant on the machine only, that would probably take care of the 40/60% of 80000 that you can claim

+1, the grant on the parlour is very easy to get, no need for planning etc, and there is a very little non grant price discount, so your getting the full 40% reduction. If I were you Whelan I'd go put in an application before the 13th Jan closing date for the next tranche, the parlour max rate is 2980/unit, which is 71520, you can get more for managers etc so you'll have no problem bringing it up over the 80k. I suggest applying now encase it does take a year to come back, I can near guarantee you ya wont ever get a handier 32k! If you are in partnership and can get the 160k I would suggest looking at it for the cubicles also later on (you can put in as many separate grant applications as you want, and I would suggest you split them up into as many segments as you want).

There obviously still is a risk with a grant that you will not end up getting it after the extra work/money you spend, but that is well worth the risk in my view (and yes this is all probably flying in the face of many previous comments I've wrote while frustrated and pulling my hair out while doing grant applications!!!)

Keepgrowing

Timmaay wrote: »

+1, the grant on the parlour is very easy to get, no need for planning etc, and there is a very little non grant price discount, so your getting the full 40% reduction. If I were you Whelan I'd go put in an application before the 13th Jan closing date for the next tranche, the parlour max rate is 2980/unit, which is 71520, you can get more for managers etc so you'll have no problem bringing it up over the 80k. I suggest applying now encase it does take a year to come back, I can near guarantee you ya wont ever get a handier 32k! If you are in partnership and can get the 160k I would suggest looking at it for the cubicles also later on (you can put in as many separate grant applications as you want, and I would suggest you split them up into as many segments as you want).

There obviously still is a risk with a grant that you will not end up getting it after the extra work/money you spend, but that is well worth the risk in my view (and yes this is all probably flying in the face of many previous comments I've wrote while frustrated and pulling my hair out while doing grant applications!!!)

Without totally derailing this thread, if one was to apply for a grant for auto scrapers Does the shed they're going into need to have planning?

whelan2

Thanks lads, on the bank front do ye think ulster bank are here for the long haul or will they pull out of Ireland, with Brexit will it make any difference?

jaymla627

Keepgrowing wrote: »

Without totally derailing this thread, if one was to apply for a grant for auto scrapers Does the shed they're going into need to have planning?

Put in for grant for parlour equipment and submitted reps plans drawings as yard sketches and they werent good enough and was asked for more official documents, left it at that as no planning was got here for any sheds down through the years and didnt want to alert the good people in the council/department to this fact

whelan2

Timmaay wrote: »

+1, the grant on the parlour is very easy to get, no need for planning etc, and there is a very little non grant price discount, so your getting the full 40% reduction. If I were you Whelan I'd go put in an application before the 13th Jan closing date for the next tranche, the parlour max rate is 2980/unit, which is 71520, you can get more for managers etc so you'll have no problem bringing it up over the 80k. I suggest applying now encase it does take a year to come back, I can near guarantee you ya wont ever get a handier 32k! If you are in partnership and can get the 160k I would suggest looking at it for the cubicles also later on (you can put in as many separate grant applications as you want, and I would suggest you split them up into as many segments as you want).

There obviously still is a risk with a grant that you will not end up getting it after the extra work/money you spend, but that is well worth the risk in my view (and yes this is all probably flying in the face of many previous comments I've wrote while frustrated and pulling my hair out while doing grant applications!!!)

Is there much work involved in putting in the application?

Timmaay

whelan2 wrote: »

Is there much work involved in putting in the application?

The agfood online application is straightforward enough, not the most counterintuitive I'll admit with a few funny drop down boxes, but the likes of your teagasc adviser or any planner etc will be well use of it and shouldnt take him more than an hour once you have all the documentation for him. The few documents that are needed include a farm yard sketch, for my home yard I've based all my sketches on a 15yr old planning application map of the yard for a shed we put in back then. The only real thing that is needed for likes of a parlour application is a number outline where each grant item is to be located on the map, let's call the milking machine item 1, outline the milking parlour in red and put a 1 beside it, bulk tank is 2, put a 2 beside it, etc etc. Other thing that is vitally important on the farmyard plan is a scale, I wrote this in myself as the drawing I had didn't have one.

As I said before the milking machine is by far the most simple to apply for, the cubicle shed will involve you having to give them a fairly detailed breakdown of your existing winter accommodation details, alongside detailed maps of what you want to build etc.

Bass Reeves

Keepgrowing wrote: »

Timmaay wrote: »

+1, the grant on the parlour is very easy to get, no need for planning etc, and there is a very little non grant price discount, so your getting the full 40% reduction. If I were you Whelan I'd go put in an application before the 13th Jan closing date for the next tranche, the parlour max rate is 2980/unit, which is 71520, you can get more for managers etc so you'll have no problem bringing it up over the 80k. I suggest applying now encase it does take a year to come back, I can near guarantee you ya wont ever get a handier 32k! If you are in partnership and can get the 160k I would suggest looking at it for the cubicles also later on (you can put in as many separate grant applications as you want, and I would suggest you split them up into as many segments as you want).

There obviously still is a risk with a grant that you will not end up getting it after the extra work/money you spend, but that is well worth the risk in my view (and yes this is all probably flying in the face of many previous comments I've wrote while frustrated and pulling my hair out while doing grant applications!!!)

Without totally derailing this thread, if one was to apply for a grant for auto scrapers Does the shed they're going into need to have planning?

Yes you need planning for the shed unless they changed the rules. Not only has the shed to be approved for planning everything within the yard is supposed to be within planning spec. If the inspector who approves the grant at the end is lax you may get away with a shed that has no planning in the yard. The only other case is if you shed was part of the exempt npart of your yard. I know of a lad that knocked an old small stone shed in 2008 to bring him below the exemption area so as not to have to apply for retention on a larger shed in a yard before he applied for planning and a grant for a new shed

lakill Farm

whelan2 wrote: »

Thanks lads, on the bank front do ye think ulster bank are here for the long haul or will they pull out of Ireland, with Brexit will it make any difference?

I think they will stay .

Bass Reeves

jaymla627 wrote: »

Keepgrowing wrote: »

Without totally derailing this thread, if one was to apply for a grant for auto scrapers Does the shed they're going into need to have planning?

Put in for grant for parlour equipment and submitted reps plans drawings as yard sketches and they werent good enough and was asked for more official documents, left it at that as no planning was got here for any sheds down through the years and didnt want to alert the good people in the council/department to this fact

I think you are only putting off the evil day. At some stage you will have to sort planning. On your yard. It will not be cheap but the more you build without planning the more it will cost. AFAIK you can subtract the exemption part from the planning.
Just an an aside the other thing to remember is in the case of a CPO no compensation or very limited compensation is paid in the case of unplanned buildings.

Timmaay

jaymla627 wrote: »

Put in for grant for parlour equipment and submitted reps plans drawings as yard sketches and they werent good enough and was asked for more official documents, left it at that as no planning was got here for any sheds down through the years and didnt want to alert the good people in the council/department to this fact

Most of my maps and drawings I've done out myself (I am a qualified engineer tho, but certainly not experienced in this specific area), I did them out with abit of free software I have on the laptop. I'm not saying anyone can go do the same, but my point is none of the maps had much to do with the council at all, and I've got grant approval on previous items here (parlour and tank in tams1), the new shed I put up for the parlour had no planning but it was an extension on existing sheds and I'm fairly sure exempt, none of the dept lads for the grant asked me anything about it though.

whelan2

Was talking to man in Teagasc, he said the next tranche of TAMS will be open for longer than the recent ones in an effort to clear the backlog

Signpost

There full of hot air about the backlog in relation to claims. Put on the front of the paper lad (& ladies) werent applying but then if you ring enquiring about the status of how the claim is going your told its in a long backlog. I asked how can there be a backlog if people arent applying for payment and they wouldn't answer, just fluffed some yarn about IT delays and working through them as quick as they can.
IFA once again very quite lipped on non payment by the dept.

Bass Reeves

Signpost wrote: »

There full of hot air about the backlog in relation to claims. Put on the front of the paper lad (& ladies) werent applying but then if you ring enquiring about the status of how the claim is going your told its in a long backlog. I asked how can there be a backlog if people arent applying for payment and they wouldn't answer, just fluffed some yarn about IT delays and working through them as quick as they can.
IFA once again very quite lipped on non payment by the dept.

I think that the government/public service/ dept of finance were watching spending the end of last year. I think thre was a deliberate hold up in payment's where possible. I a! Still waiting for a VAT claim that went in last November. Usually these are paid out within 2-3 weeks. Friend of mine told me less was waiting for an income tax balancing repayment some the same time, the balancing payment was made to his wife. I expect that these payments will be accelerated from now on.