Urgently Need Business Loan

Percy123

Hi I was wondering if anyone could help me with my problem.

I have recently set up my own business and currently have a merchant account with Barclays. I take payment over the phone using their virtual terminal but due to my business being classed as high risk there is a 14 day security hold on the account before I can access the money.

The business relies largely on invoicing and in 3 weeks trading I already have nearly £2000 profit but I have serious cash flow problems due to the restrictions on the merchant account.

I cannot get a business over draft due to not having any trading history and I have poor personal credit.

I wanted to find out if there is any way I can get a business loan taking into account my credit history and current situation.

Thanks for reading

ILW

Bit unclear, you say your busieness relies on invoicing but also that you take payments over the phone, seems a bit of a contradiction.

Percy123

We do both. We rely on invoicing for account customers but new customers payments are taken over the phone.

ILW

Can you not negotiate better terms with your suppliers?

Percy123

There are no suppliers. The business is an emergency response company offering things like Glazing/Locksmiths and Plumbers. The account customers are on 30 day invoicing as it is. The only problem is i did not realise that Barclays would put this security hold on the account. Theres no problems with the business, i just need some cashflow as the merchant account and terminal goes live tomorrow and i still have things to pay for.

ILW

Will the bank not offer a temporary overdraft based on the amount that is sitting in the merchant account?

Failing that, it sounds like you need working capital and should be looking for an investor or two.

paddyrg

Offer a 5% discount on non-terms payment (ie if they pay by cash/cheque on the day instead of a 30-day invoice) until you get your cashflow sorted

Percy123

This was my thought too and will call Tomorrow to see if it's possible. Just trying to get some ideas should that not work.

chalkie99

If you have only been trading for 3 weeks and have issued 30 day terms invoices there is a distinct possibility you will face further problems when those invoices don' get paid on time. Very few businesses pay on 30 days and you might be waiting 2 or 3 months for your money.

You could have a word with your bank and see if they can recommend an invoice factoring service which would pay you a percentage of your invoices very quickly and then take the payments from your customers.

paddyrg

Good call Chalkie. 'Factoring' is effectively borrowing against invoices issued, but can mean only seeing 85p/£ (upto maybe 98p/£) depending on the quality of the client. For multiple small invoices, factoring may be less handy than one or two large ones.

But can you take evidence of all those invoices and clients into see your business banking manager, and ask to borrow/overdraft against them?

ILW

One problem with invoice financing can be that the bank do tend to carry pretty stringent credit checks on your customers, which I have found that some object to.