Single or Joint Application

Morpheus2009

Hi Everyone,

I am currently looking at a number of options to buy a business I have been doing Due Dilliegence on for a few weeks now.

The business plan is great and the business is capable of giving us a good living. Unfortunately the banks are looking for 100% security for the commerical loan even using the EFG Scheme. The problem is we don't have a great deal of equity in our home when you work on the 70% of valuation minus outstanding mortgage rule that many banks use.

With this in mind I am looking for as many alternative sources of funding as possible to minimise the commercial loan and thus reduce the amount of security required to something more managable.

At the moment I am not working - I left the corporate world a few months back. My wife is in a secure NHS job therefore we am looking to get a loan in her name.

Now finally my question
Is it best for her to apply as a single applicant or for us to apply as a joint application? Also if a single applicant do we have to declare all our payments e.g. the mortgage comes out of my personal account, therefore the lender would not take a mortgage payment into consideration when looking at affordability.

Thanks for any advice you can all give.
R :j

geoffky

...is this ten thousand or 100k because it makes a difference on risk taking....now is not a good time to be taking financial risks as this reccession could go on and on and on.....some company's are going from lots of orders one month and none for the next two its that volatile out there..

Morpheus2009

The business is 120k in total but with a 25k personal loan plus 25k I already have we could get the commercial loan down to 70k (and with 75% EFGS security I would have to guarantee an additional 17.5k.

Rest assured we are going into this eyes wide open, the industry we are buying in is actually growing (admittedly not as fast as previously) but overall 2009 growth was still about 12%. The banks have all said they think its a great business and a sensible opportunity and they would invest if I could put up 50k of security (whcih I can't) therefore looking at alternatives to reduce this guarantee need.

Cheers

jonesMUFCforever

You are in danger of over committing yourself - simple as that - sorry if it is not what you want to hear.

Morpheus2009

Sorry everyone but if you have not carried out due dilligence on this business please do not comment on my ability to make a decision about this business and its viability. I have the facts needed and a highly experienced team of advisors around me for this venture.

I have been running businesses for many years (through good and bad) and have enough experience in large multinational and small business management to make my own well informed decisions about a businesses viability and our ability to fund it - lets face it - two years ago we would not even be struggeling to raise this funding - now we just have to be a little more creative in how to put the finances together.

I do however look forward to people advising me on the best way to apply for a personal loan given our circumstances - single or joint?

jonesMUFCforever

Don't do it - you are deluding yourself.
You say that you are an experienced businessman - why do you not have retained profits from previous ventures to see you through this.

It is not highly trained advisers you need but money - which you do not have.
If you really think that a bank will simply give you a £25k personal loan for business purposes without a salary to repay you are in cloud cuckoo land.
I really hope you make a go of it but without capital you will struggle.

Morpheus2009

jonesMUFCforever wrote: »

Don't do it - you are deluding yourself.
You say that you are an experienced businessman - why do you not have retained profits from previous ventures to see you through this.

It is not highly trained advisers you need but money - which you do not have.
If you really think that a bank will simply give you a £25k personal loan for business purposes without a salary to repay you are in cloud cuckoo land.
I really hope you make a go of it but without capital you will struggle.

Anyone who asks the question - why do you not have retained profits from previous ventures? clearly has no clue about how businesses work - this is a ltd company!!!! Banks all want to give me a loan on the strength of the business plan however in the current economy they are very sensitive to risk and need capital security! I don't have enough when you use their calculation - therefore reducing the loan size by £??k reduces the amount of security they need to a point where I can cover the security guarantee...

Also if you had actually bothered to read my original question you will see that the loan is not being requested against myself without a salary but my wife with a secure NHS job! So sir I have to say it is you that is deluded and in cloud cuckoo land.

I think you need to stop juding my ability to test the financial viability of this business and if you don't have a constructive statement about the actual question I asked about single or joint applications then please don't comment at all. For your information I was with the HSBC today who are very interested in the business and are more than happy to lend the business the 100k it needs because they know it is a sound business which can pay its way and still give me a good dividend at the end of the year!!! I think I trust their opinion a little more than someone who can incorrectly judge me after a simple forum post!

Rafter

Morpheus,

Getting a £25k unsecured loan just like that is going to be nearly impossible in current conditions - unless your wife is earning £70k+ in my view.

Banks usually won't give unsecured loans for business purposes so unless you are planning to commit application fraud then you are also going to find that a difficult hurdle.

Generally a joint application will be 'scored' more favourably because the bank has two peoples assets and income as 'security' although the fact you are not currently working might make that benefit negligalble.

R.

jonesMUFCforever

If you had retained profits from previous ventures what is stopping you from pumping these funds into the limited company as a director's loan?

Answer (I ASSUME) you don't have any.

I wish you well but the way you are going about raising finance would frighten me off as a banker.