I want a £100,000 loan, is this possible?

BL1

I am looking to start a business and would require a loan of £100,000, do think I will be able to get this?

Thank you

BL1

Robert_Sterling_3

Are you over eighteen years old. If not then no.

daveboy

Even if you are 18, getting £100k is very unlikely unless you have some other form of support behind you - and a good business idea that a lender would jump on.

Not knocking MSE but if you're asking on here then I would say that you're going to struggle.

BL1

I am 22, jus left university. I have a great business idea. I have detailed business plans showing just how much this business will make. I have projected that I will be able to pay back the money in 5 yrs with 100% interest.

However I do not have a house as capital. I would you some of the money as the deposit for the building for my business. Could i tell the bank this is what I am doing and say they could use the building I buy as capital once i have done this?

Thank you

a_j_bingham

Check out the following website, it may be of interest to you -
http://www.dti.gov.uk/sflg/

In my experience banks usually want you to match the amount they invest, so that if the business is not successful at least they have a good chance of recovering the unsecured amount, which has to be at least 25% of the loan. This may mean you need to find an investor, but if the idea is so good that shouldn't be difficult.

The bank will want to see cash flow projections and estimated profit and loss accounts for the first three years, they will want these prepared by an accountant. In any case it is probably wise to have your business plan examined by an accountant as they will be able to point out any flaws in it. For example couldn't you borrow less money by initially renting premises?

People have a tendency to get caught up in the excitement of launching a new venture and there expectations are often unrealistic. Make sure your figures are realistic, particularly the turnover, it can take along time to build up your customer base.

I hope this information is of some use, I'd be interested to find out how you get on.

Regards,
Andrew.

trickytrolleys

Also try the Princes trust, I dont think youd get that amount but a business adviser would look at your plan and advise you o it and they offer loans - it is aimed at people your age - if you could get some from different areas then you dont have to ask your bank for so much.

BL1

Thanks for the replies guys

I have been in touch with the princes trust they have offered me £5,000 if i can get the rest of the funding. I require a total of £250,000 to start the business. I have £27,500 of my own money that I will put in, i have 9 investors each offering £2,500 and me and my business partner were both looking to get loans of £100,000 each. Ive had a quick look at the small firms loan gurantee, need to read it through properly but that looks like it could be my saviour!! I have detailed projections and estimated profit and loss accounts documents for the first 10 years of operation and i have planned for the first year that i do not make any money at all, so anything i do earn in the year will be a bonus. This will give me a year to get the customer base up to the required figure. The majority of the money will go on equipment around £110,000 that is the biggest expense.

Any other advice would be great

Thanks again

BL1

a_j_bingham

It's difficult giving any further advice without knowing anything about the nature of the business.

The start up costs seem high? How much of the budget will be spent initially? How much is left in reserve to see you through the first few months? Is it feasible to start the business on a smaller scale and fund expansion from profits generated?

Cash flow is so important, you may break even in the first year, but if you're in deficit after six months, you might not make it till the end of the year. Many good ideas fail because they don't have sufficient capital.

The cash flow projections should be prepared first and then the profit and loss accounts will be based on this, this will show up any flaws in your planning.

For example, although you can claim the VAT back on your machinery, you will have to pay this out initially, on your figures this would be an additional £19250. Have you included this in your cash flow projections? You will only be able to claim this back at the end of your first VAT period. Be aware that the HM Revenue & Customs sometimes investigates large repayments, which could delay things, some businesses have been started fraudulently.

Have you taken into account the loan repayments?

Presumably you've budgeted for yours and your partners wages?

Have you included all the hidden expenses e.g. employers national insurance contributions on wages?

As i said before, make sure you have a good accountant to check your figures, it's easy to write figures on a piece of paper. It's hard enough to do accurate projections for three years, the fact you have them for ten years is meaningless, the later years are almost certainly irrelevant.

I hope this helps.

Andrew.

BL1

Hi Aj

Cheers for the reply. Your actually making me feel quite good about the planning I have done because ive covered everything you've suggested, thats not to say i wouldnt want you to suggest anything else because im sure there are things i have missed and it be good to indentify them now.

The business is a fitness facility and boxing centre. Obviously you can assume cost of alot of equipment is high, this is the absolute minimum i can go down to equipment has already been cut numerous times, further expansions will be made, 3 of them infact in operation years 5,6 and 7. I have put in my plan that will start the first year with £60,000 in the account to cover my costs for the 1st year.

I have included the cost of VAT on the equipment i buy, but i haven't included receiving back so there is extra money that can be put into the overall income column.

I have budgeted for loan repayments at 10% per year and paying back £800,000 from the two loans so I would pay back £40,000 a year. This is only an estimation though.

I have not included anything about hidden expenses e.g. employers national insurance contributions on wages, this is something i will have to look into, I had no idea about this.

Thanks again

BL1

burbs_2

Mate i started my 1st business at 21 and took a huge amount of money out. Im now 23 and run 2 succesful businesses with the 3rd going live in after Christmas some time so i have been where you are now.

You seem to have worked things out and know what you are talking about, this is the most important thing. Banks and business advisors see a lot of dreamers and they will send you packing before you have time to sit down if you are not up to scratch with your business plan.

In all my experiences with banks they all said that they will only give up to 70% of the total start up capital. Also when i went to Barclays they did not even open my business plan, they knew my age, knew my business involved sports cars and told me to get a real job basically. I now get letter upon letter asking me if i require a business loan from them, avoid them at all costs.

What area are you based in? Do you have Business Links and Enterprise?

BL1

Hi Burbs

Its good to hear from someone who has been in the same situation, i must admit that my motivation is starting to dip slightly. Congratulations on your success, I hope i can be as successful as you.

From reviewing my finances last night i think I will need £270,000 to start up. If 70% is what the bank will give me then i will need to look at other areas of funding, which is proving very difficult for me.

Im based in York, im afraid i dont know what Business Links and Enterprise is, so i wouldnt know.

Can i just say i big thankyou to every1 who has replied, i know it only takes a couple of mins to reply but it means the world to me as this is my dream

Thanks

BL1