Aquiring a business loan for start up?

robeleth

Hi, I am looking to start a business at my current place of work which is due to close shortly. I need around £300,000 to purchase an existing plant and land for what is an established order book with huge profit potential with a world renowned oil company that cannot get this product from anywhere else. My question is how to go about borrowing such an amount and from whom? I have the knowledge of the business but not the finance to purchase without borrowing.

Lomast

I dont think you have much hope of getting a loan to cover that.

Only way i could see you doing it would be if you had sufficient security then maybe a secured loan or re/mortgage.

Or you would need to find an investor who would put the money up but i have no idea where you would find one

DCFC79

robeleth wrote: »

Hi, I am looking to start a business at my current place of work which is due to close shortly. I need around £300,000 to purchase an existing plant and land for what is an established order book with huge profit potential with a world renowned oil company that cannot get this product from anywhere else. My question is how to go about borrowing such an amount and from whom? I have the knowledge of the business but not the finance to purchase without borrowing.

Well you need a business plan first, google for 1 of these and speak to your bank manager.

Do you have any collateral to use if it fails ?

Good luck, don't like your chances much.

robeleth

The vast majority of cash is needed to buy the land, however, there is a high chance of the company selling us the land at a reduced rate, likewise the buildings and equipment. Basically it is a multi national company disposing of a small subsidary, small fry to them in other words. The multi national still wishes to supply customers with this specialist product but cannot find a toll manufacturer, hence the opportunity.

meer53

Huge profit potential with a world renowned oil company ? I would imagine there are businesses out there who could buy the land and equipment in cash tomorrow. Are there other people looking at investing in this ? How long do you have to come up with the cash ? If there aren't others interested, maybe have a think about why ?

A business plan and your bank is your way forward here.

dealer_wins

If youve got £150K to put into the business and a reasonable business plan then you may get a loan, if you expect the bank to hand over a 1/3 million with no financial commitment from yourself, then you are living in cloud cuckoo land LOL

jonesMUFCforever

robeleth wrote: »

Hi, I am looking to start a business at my current place of work which is due to close shortly. I need around £300,000 to purchase an existing plant and land for what is an established order book with huge profit potential with a world renowned oil company that cannot get this product from anywhere else. My question is how to go about borrowing such an amount and from whom? I have the knowledge of the business but not the finance to purchase without borrowing.

You assume that the ''order book'' will still be there when you take over?
Have you seen the books - have you had them audited?

Why is the place closing down if it is making a profit?
Believe me anything you can produce there can be done cheaper in China or India so what happens if someone copies you?
Is this a one man band? How many people work there?

If there are loads of you could you form a cooperative and pool your redundancy money?

Tixy

What is your personal situation?

Do you have substantial savings? a house with considerable equity? A spotless credit history?

You won't be able to borrow 100% of the purchase price from banks/commercial lenders but if you can put some money /security in yourself, possibly get a commercial mortgage on the land/building and asset finance some of the equipment and then maybe talk to the vendor about deferring some of the purchase price over perhaps a couple of years then perhaps between all those you might stand a chance.

All of those potential lenders will want a very detailed and robust business plan in place with detailed projections that will stand up to independant scrutiny. If you are unable to produce that yourself I'd suggest getting some professional help in order to do so.

robeleth

The order book would have to be guarenteed by the company for 2 yaers minimum in order for us to proceed, they can do this and be safe in the knowledge they have a producer and that product will be made to the required standards, something other toll producers have been unable to do. It is closing down because it is a small part of a huge global business, the other product made on site is made elsewhere in europe and is over produced, the other product made on site (our product) is the only facility this company has in europe.It breaks even mainly due to all the associated costs at the site which employs 90 people, the highest costs are salary and all other services such as engineering and logistics, those costs would be reduced hugely with around 10 people being employed.
There are 3 of us with limited equity but the parent company has expressed an interest to talk to us, they are in a hurry due to orders needing to be fulfilled.
We would look to spread the land cost over several years and aquire it at a reduced price from the parent company, the land will always have a value.

jonesMUFCforever

robeleth wrote: »

The order book would have to be guarenteed by the company for 2 yaers minimum in order for us to proceed, they can do this and be safe in the knowledge they have a producer and that product will be made to the required standards, something other toll producers have been unable to do. It is closing down because it is a small part of a huge global business, the other product made on site is made elsewhere in europe and is over produced, the other product made on site (our product) is the only facility this company has in europe.It breaks even mainly due to all the associated costs at the site which employs 90 people, the highest costs are salary and all other services such as engineering and logistics, those costs would be reduced hugely with around 10 people being employed.
There are 3 of us with limited equity but the parent company has expressed an interest to talk to us, they are in a hurry due to orders needing to be fulfilled.
We would look to spread the land cost over several years and aquire it at a reduced price from the parent company, the land will always have a value.

The land you say will always have a value.
The value is only what someone else will pay for it after making sure that it is clean and available for development with planning etc
What happens after 2 years?
Are you prepared to risk your home should it go wrong?

gb12345

robeleth wrote: »

The order book would have to be guarenteed by the company for 2 yaers minimum in order for us to proceed

Would you have the funds to pay for a costly legal action if the company decided not to honour the guarantee? They are a "huge global business" so they wouldn't bat an eyelid at paying for top legal representation.

Assuming the guarantee did hold then after 2 years they find another supplier - will there be other customers to buy your product? Can you easily produce other items? Or will you be left with a huge white elephant?

robeleth wrote: »

It breaks even mainly due to all the associated costs at the site which employs 90 people, the highest costs are salary and all other services such as engineering and logistics, those costs would be reduced hugely with around 10 people being employed.

How can 10 people do the work that 90 were doing previously? Have you considered all the support functions that you will need that the current company probably funds centrally, such as legal, HR etc.

robeleth wrote: »

There are 3 of us with limited equity but the parent company has expressed an interest to talk to us, they are in a hurry due to orders needing to be fulfilled.

How limited is the limited equity? Also, do any of you have any experience of running a business?