Business loan advice

Telbert

Hello people, thank you for your help in advance, please can you reply if you have knowledge in this field.

I have seen an existing established business I wish to buy which is 95 thousand, according to the business it turns over 800k per annum with 20% of that gross profit. Would a bank give me a 10 year loan of 100k secured against the business I wish to buy rather than against my home(aside from credit checks etc)??

Many thanks

bris

No, and neither do the figures stack up, no one sells a business with that turnover and profit for 95k. Please check again this is not right.

Telbert

Cheers, numbers aside I guess the question is will a bank loan against the business instead of my home?

Thank you

antrobus

bris wrote: »

No, and neither do the figures stack up, no one sells a business with that turnover and profit for 95k. Please check again this is not right.

Dunno, depends. The man did say the turnover was "800k per annum with 20% of that gross profit" - no mention of net profit, so it depends on what the overheads are like.

One thing I can say with some degree of certainty, is that no bank in it's right mind would lend someone £100k to buy a business for £95k without some additional security. Like some equity in a nice house somewhere. Banks aren't in the business of taking 100% of the risk for 0% of the reward. (Or at least they're not supposed to.)

[Deleted User]

any bank will want to see a)you put some of your own money up front and b)a sound business plan
i would usually expect a business asking price to be 10 times weekly t/o which in this case would be £160k plus stock etc

Telbert

Antrobus, thank you for your answer, I get what your saying reference risk, with it being an existing business established for over 15 years i thought it may have been less of a risk then a new start up. But that's what these forums are for to get help :0)

DCFC79

The bank will be taking a risk on you. Do you have experience of running a business ?

Telbert

DCFC79 wrote: »

The bank will be taking a risk on you. Do you have experience of running a business ?

Not my own business but experience of the business, essentially I'm looking at buying a used car site, I have been a car salesmen for 15 years.

ILW

What is the 95k actually buying?

paddyrg

Is the £95k for a particular dealership franchise? If it is just for a lot and stock, it may be a better bet to just set up opposite if they're trying to sell anyway (then you have a lot to spend on stock and discounting).

They are trying to sell, so setting up opposite and cheaper will scare off potential buyers meaning he'll probably just end up closing down leaving you to pick up the trade. And saving £95k ;-)

geoffky

20% gp are you mad..