£270,000 loan - needs projections!

robert_harper_2000

Hello

My father & I met the bank manager today and were asking for a business loan of £270,00.

We have been given rough figures - I would like advice on these listed ( thanks )

It has been split into
1. loan over 180 months for £170,000 @ 7.5% with an admin fee of £2,890.00
2. mortgage the business pays ( something to do with tax advantages) uswing our house as security for £100,000 @ 4.89% over 12 years.

I have been also asked for projections using a spreadsheet- does anyone have this or do I have to type something up??

Thank you everyone!

oldwiring

What projections are you meaning- out goings for example?

robert_harper_2000

Yeap, all outgoings incoming etc projecting a positive balance! He would like charts etc

oldwiring

How often will interst be applied to loan?
to mortgage?

robert_harper_2000

how often? Well it is a loan & mortgage so worked out like all other debts... ?? What do you mean

zopamember

Just guessing, but the bank will probably want fairly detailed forecasts of profits and cash flow to demonstrate that the business will be able to meet the loan repayments before it will give you the money. The bank will probably review the figures and the underlying assumptions before offering you the money.

If you don't feel comforable preparing the forecast yourself or you can't get a friend who is sufficiently knowledgeable to help you out, I would suggest that you get an accountant to do them. This will cost you, but most accountants should be well experienced in this area and you should get a good forecast which will be useful for your own business planning purposes as well as for the bank. However, if you need a fairly simple forecast you probably don't need an accountant - you should clarify with the bank exactly what they require.

robert_harper_2000

What's the best forecast I could make surely people have a copy they have made and could possibly spread the goodwill? Plus save me the work lol

Pennywise

Most banks provide their own templates - ask yours exactly what they want and how they want it presented. They should be able to give you paper spreadsheets to give you an idea of the format or if they are any good, they'll have a download on their website.

What you definitely shouldn't do is waste a load of time and money working blind. I did this once - produced a truly impressive 5 year business plan only to be told by the bank that it had to have specific rows and columns otherwise it wouldn't "fit into" their in-house evaluation - had to do the whole thing again (Barlcays it was about 7 years ago).

Your forecasts/plan should not just be for the bank though - it should be a tool to help you fully understand your business idea and work through the consequences of your decisions, i.e. how much more profit if you put prices up, how much more profit if you work harder/sell more, etc etc.

robert_harper_2000

Excellent that was what I was just about to do ( spend ages working on what I think they want! ).

I'm looking forward to this project and your right this should be a standard thing done every year. This will help to make inprovements!

Thanks