business loan?

Glitterpix

Hello, I'm a young (Well, 24) stay at home mum, and have just started up an etsy shop. I've only had it up a couple of weeks and it's doing well already

I've been considering getting a small loan to help with buying in stock, would this be a good idea? How do I go about it?

I already have a barclaycard credit card, with a small limit, but was thinking a loan would be better as I could get the stock in now when I need it in one go...

Really new to this!

Tixy

What sort of figures are you thinking of borrowing?

For a business loan you'd need to put together a business plan and decent financial projections to demonstrate that you can make money and afford to make the loan repayments for a bank to review.
If this is your only income getting a personal loan (not a business loan) is likely to be tough as you won't have any current income or any financial results to show the bank in terms of self-employed income.

Another option would be to consider something like the princes trust fund - which helps young people in business/starting in busines. Your local Business Link office may also be able to suggest other similar organisations / projects that specifically help young people getting into business either with loans or grants.

Glitterpix

I was thinking of borrowing £5000. Could I not get a personal loan and use that, as its just a small etsy shop that I've opened?

Glitterpix

or could I get a personal loan, to use for personal stuff, and use a small lump of that towards buying in stock (fabrics and such) or is that against rules?

Tixy

You could get a personal loan to fund a start up of al business in theory. But the problem with a personal loan is a bank would expect you to be earning (either employed, or established self-employed) sufficent income to be convinced you could afford repayments.
If you have no job, and only started self-employment 2 weeks ago then its very unlikely you'll get a loan.

Have you had advice on starting your business? have you registered as self-employed with HMRC for example?

alunharford

Don't borrow money personally to lend it to your business - if the business goes bust you lose your job and you're left with massive debts. You want to keep your risk small (whilst obviously maximising the profits).

Banks are unlikely to want to lend lots of money to a small business that statistically is very likely to go bust quite quickly.

It's far better (and perfectly normal) to get your suppliers to lend you stock (and, potentially, money). That's a better way fund a small retail business (it's pretty low risk for the supplier as they will get the stock back if you go bust). It's called 'consignment'. You may (or may not) also be able to agree that you can return stock you cannot sell to the supplier and they will refund you the cost.

Glitterpix

Thanks for the advice guys

I'm going to fill out all the forms to declare myself as self employed etc this week. I've also decided to just save up for a couple of months and buy what I can, it's also my 25th birthday this month so I'll be using birthday money that my parents insist on giving me towards stock A much more sensible safer option now I've thought on it properly