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Forming a second company & finances

  • 05-04-2018 10:20am
    #1
    thebooxttt
    Registered Users, Registered Users 2 Posts: 20 ✭


    I'm director & employee of a company that runs a pub.

    A restaurant down the street has become available to lease which I'm currently negotiating with he landlord.
    I will need a bank loan of €20k to get the new restaurant (which is fully kitted with brand new cooking equipment) up to speed with regard to crockery, Cash pos system, decor, consumables etc.

    My current pub business (company limited), which is also leased, is going well but is still growing with no surplus funds. When I took it on over a year ago, it came with all second hand equipment which was operating but did not form part of the lease & has sequentially broken down over the past year! €2,000 for cooling system in May, €3,000 for air con in July, €2,000 for fridges in August, stuff like that. So, as stuff broke down I paid for it up front as it couldn't be leased through my bank under €5k. As a consequence, I was unable to settle my Sept/Oct 2017 VAT bill of €8k & I contacted revenue who kindly obliged with an extension until June 2018 to make full payment. Everything since is up to date regarding VAT, P30, Corporation tax etc and all creditors are up to date. I'm confident that the €8k can be paid in full over the next 3 months as we approach our busy period but I willneed the restaurant loan before then and assume I won't be able to obtain a tax clearance cert.

    So, the main questions:
    Will the bank likely reject a loan application even though an agreement is in place with Revenue? I'm guessing yes!
    Would I be better forming a new company for the new business & applying for a startup loan as a new customer? I know I will attract double fees for accountancy & banking etc, but it seems to my untrained eye that this might be the best option.
    Is there any other way of securing the €20k with my bank though the current company, which was formed only over a year ago for the purpose of running the pub? There was an initial startup loan of €10k for the pub which now stands at €3k.

    Any advice greatly appreciated.
    Thanks, T.


Comments

  • #2
    Paddy001
    Registered Users, Registered Users 2 Posts: 724 ✭✭✭Paddy001


    You should speak to the case manager in Revenue, they may be willing to provide tax clearance to the current company and you personally but they may require part payment first. This would then remove this obstacle from the bank loan.

    I would agree that a second company is best as it protects both businesses from each other to a limited degree. You could form a corporate group with them in future in order to loan funds between them if you end up in a position where one is generating excess funds which the other requires.


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