equestrian business start up loan/mortgage

WhereIsMyTV

Hi

I would like to start an equestrian business but don't know where to go for a loan. I have many years experience of running my own private yard (on my parents property) and riding my own horses but recently I have taken on a couple of clients who want me to produce their horses for competition/sale. I now need to buy my own facilities and incorporate a few liveries (people who pay to have their horses looked after usually on a long term basis) to offer me a consistent income and I can teach aswell.
At the moment I don't own my own home.

Firstly, can I get a loan which incorporates a property, so similar to getting a normal mortgage but borrowing a larger amount than would normally be offered because it has a business attatched to it? I can get a mortgage up to about 250k but for a place with the type of facilities that I would need then I would be looking for more like 500k.

Secondly, will anybody even look at offering me a business loan without evidence that I can run a business? So would I be better off renting a yard for a couple of years first. (although I don't want to go down this route because it is so hard to find decent facilities to rent)

Thirdly, my other half can offer financial support towards the monthly cost of the loan as he is employed in a well paid job and would own the property with me, what difference does that make?

I have more questions but best leave it at that for now! Any help would be much appreciated.
Thanks

getmore4less

WhereIsMyTV wrote: »

Hi

I would like to start an equestrian business but don't know where to go for a loan. ........

Start with an outline business plan that show the potential income from such a venture and what sort of debt it could support.

if it looks viable then consider fleshing it out in detail, no one is going to lend on a business without one.

To cover a 500k loan at 5% interest only would need at least 2k per month after all other costs and that is before you start paying yourself

What can you get for a box in your area 50pw or more, plus a bit of profit if you do full service thats still a lot of boxes to cover 2k or if you count 1/2 the costs as normal housing you still need to cover 1k worth of interest.

paulwf

One option for security may be the Enterprise Finance Guarantee, see http://www.berr.gov.uk/whatwedo/enterprise/enterprisesmes/info-business-owners/access-to-finance/efg/page37607.html

I'd advise going on the Business Link courses, they are free and usually fairly local and frequent, they will allow you to bounce around ideas.

Remember that property is only one part of the start up costs, equipment, legal fees and working capital can add a huge chunk.

I've found my local HSBC business manager to be very good allowing me to have an "informal chat" whereas other banks wanted to dive straight into a formal business plan discussion...experiences will probably differ though.

Although you are only just thinking about starting now is the time to work on your exit strategy, i.e. how much money would you get back if the business failed? If you stand to lose a lot then a couple of years renting first could potentially save you a lot of money (I don't mean to sound negative as your idea sounds good, just you have to think about these things).

fengirl_2

Why do you have to own your own yard? Have you considered renting until the business is established?

Horace

It would make more sense to rent a yard as you don't know if you will be successful. Also what is wrong with the yard at your parents' property?

lesley1960

getmore4less wrote: »

Start with an outline business plan that show the potential income from such a venture and what sort of debt it could support.

if it looks viable then consider fleshing it out in detail, no one is going to lend on a business without one.

To cover a 500k loan at 5% interest only would need at least 2k per month after all other costs and that is before you start paying yourself

What can you get for a box in your area 50pw or more, plus a bit of profit if you do full service thats still a lot of boxes to cover 2k or if you count 1/2 the costs as normal housing you still need to cover 1k worth of interest.

thats going to be just in interest ,? in my experience business loans are over 10 -15 years

How many liveries do you expect to have at full capacity and at what cost ? ..................then half it

then there are the overheads , rates , insurance , water , electric

How many livery yards are in your area and at what capacity are they working at , and what do they charge

Will it be DIY or full livery ( extra staff needed ? )

WhereIsMyTV

Hi

My parents yard isn't big enough, we only have 4 stables here and 5 acres. For a business to be profitable then I would need more like 15 stables and 30 acres. Plus I need an indoor school which we don't have either.

It is very diffficult to find a yard with the right facilities to rent, although if I could find one then I would go down that route. However I don't like the idea of renting at a cost of about 1k per month and that being dead money...I know that this may be preferable to the possibility of losing everything if the business failed but in the past 5 years I have rented my own house at a cost of about 8k per year and I can't stand the thought of losing all that potential equity for another 5 years.

There is plenty of demand for a good yard in our area and the going rate is about £85 per week for full livery. On top of that I can offer schooling of the horses for either about £20-30 per ride or as a package with livery at about £150 per week. I can also teach for £30 per hour but this is the unknown risk- in the beginning I can't acurately predict how much business I will have. I am currently making a name for myself on the competition circuit and so would be able to charge a premium for my services and that would also entice people to my yard.
Paying staff shouldn't be a problem because I could take on a working pupil who would either work in return for training or a very small wage

The other thing is that my partner will pay half of the mortgage so that would reduce costs significantly and open a can of worms at the same time no doubt!

I still don't know whether I get a business loan or a mortgage? Or both??!

paulwf

"I still don't know whether I get a business loan or a mortgage? Or both??!"

Take things in small steps rather trying to cover everything in one go. Do the Business Link courses then you can start writing a business plan with costings. You can do several types of forecasts, perhaps one for a home included, one without, one with teaching included, one without etc

If you include a house you have to think carefully about what will happen if you want to sell the business, will you also have to move?

Can you look at any similar businesses up for sale to get a look at the books? Is there anyone in the industry you can approach to get advice?

I've spent the last couple of months researching a business venture, only one small point might get resolved in a day but over time it has evolved into a full business plan, quite a bit different to how I first envisaged it. There's no need to rush to make decisions, the best path may make itself clear in time.

Belinda_W

May I ask are you a qualified instuctor? also another very important financial consideration is insurance especially if you go down the instrutor and producing route?

I also think that you would intially be better off to rent before you buy get a short term lease then if things are going well then look to buy if not then you can cut your losses

Just wondering! What type of horses are you going to produce? I ask this as it is very much a who knows who business as apposed to who knows what. Personally I think that its about time the who knows who business is hmm.... lets just say a change is as good as a rest. I support who knows what as apposed to who knows who

nofootnohorse

Hi Where is my TV.
I am in exactly the same boat as you. I have viewed a farm with house land and buildings and am wanting to put an offer in. I hope to change 2 barns into stables and install an arena and lunge pen. Hope for about 15 DIY liveries and 5 full liveries. I will also offer schooling etc and am an eventer so hope to take some competition liveries on too. I have googled "equestrian mortgages / loans" and found lots of rural/country companies prepared to have a look at yr figures and have spoken to a few and am awaiting other replies. The general high street banks are not too keen unless its already an established business ( for me its not - a new business). Ive been quoted approx £2k on repayment terms over 25 yrs on a £450000 mortagage and £1k on interest only - so not as much as I thought. The rural companies tend to offer a more residential mortgage on a rural business. I have to sell my house to have a hopeful deposit of £200k as the most the firms will offer is 70% of the farm/land value.
Let me know how you are getting on.
Im going back today for a 2nd viewing so all n eeds to move very fast.

WhereIsMyTV

70% is pretty tough considering how much these types of properties cost. I best start scouring the property market in The Orkneys!