bad credit unsecured business loan

oddjohnny

trying to get a business loan, but everyone wants upfront fees & i'm reluctant to pay them due to reviews on various websites.
need to borrow around £10000.
current income is £1200pcm, but will increase to £1700 with the additional investment.
debts are just under £1000.
Any ideas???

Tixy

Don't pay anyone up front fees.

The place to try to obtain a business loan is from a high street bank supported by a robust business plan and sound financial projections.
Is your business a sole trader or a limited company? what do you mean by bad credit? can you offer the bank any security against the debt?

oddjohnny

had a previous business bank account which was closed due to inactivity & was overdrawn by £700. It's been passed on to a dca, but i can't find out who they are to sort payment.
I'm a sole trader with nothing but business assets totaling £2000, but £9300 of the loan would be to purchase 2nd hand plant for the business, which would be included in the assets.
Expected turnover for the business in the 1st year is just over £15,000 & high st banks aren't entertaining the idea, even though i have a great business plan, due to turnover being below £25,000 & my previous account.
Tried getting personal loans, etc, but they all want upfront fees for brokerage & charge huge amounts of interest.
Any ideas?

Tixy

If you are looking at buying plant then consider looking for finance secured on the plant - this is a common way to fund buying second hand plant - or a good proportion of it.

But at a turnover of £15k I'd think a loan of £10k is way too rich to be considered, What gross profit and net profit are you projecting?

poppasmurf_bewdley

As a rule of thumb, someone with a good credit rating will normally be able to borrow a maximum of up to half his or her annual salary IN TOTAL (this includes credit card outstanding balances, etc).

With a poor credit rating, I'm sorry to say you won't be offered a loan without a guarantor. Even with a guarantor, you would be lucky to get one.

oddjohnny

customers supply most of the materials
total business expenditure-not including loan repayments is £4200
this includes wages.
As such gross & net are not applicable
I wont be paying tax

Tixy

I don't think any bank will lend to you with a business plan that says gross and net profit are not applicable - its possible for them to be the same figure but they are very relevant for them to understand if the business can afford to repay the loan and provide a profit that would be a sufficent living wage to the trader.

I don't think the point about not paying tax will make any difference to a lender and whether they would accept you for a loan or secured finance - well that's assuming you mean that you think your business won't have a taxable profit in the first year due to capital allowances (as opposed to you are planning on tax evasion - in which case I guess it certainly would make a difference to a lender).

oddjohnny

No.... have already registered with inland revenue!!!
Gross income for the past 4mths=£3126.00 .............Net=£3037.24
Current projected gross income for the next 8 mths=£7815.00 ........... Net=£7593.10
Total gross for yr1=£10941.00 ........... Net=£10630.34
Projected gross income for the next 8 mths with loan=£10400.00 .......... Net=£9779.17
Total gross for yr1 with loan=£13526.00 ......... Net=£12816.41
Current projected gross income for yr2=£11488.05 .......... Net=£11161.86
Projected gross income with loan yr2=£16380.00 .......... Net£13457.23
As gross/net differences are currently small I tried not to bore you with the details, but they do start to make a serious difference in yr2 with the loan.
I have not taken into account repayments of the loan as I don't have an interest rate to go by.
It would also be ideal for a £10000 loan, but if the rate is too high have alternative figures for a smaller loan.
I have very little in the way of personal outgoings.
I live with my parents & draw a wage of £400pcm from the business, but could quite easily make do with less.
Thanks for your help.
Hope I haven't bored you too much & look forward to any advice you can give to help.......
Cheers
Jr

oddjohnny

also get working tax credit of £383pcm