Business Finance

andystephens

Hi All,

Sorry to keep asking all these questions but I want to make sure I get things right from the start.

We have found an existing businessto buy, the only thing now is to get the money together. We dont have any security to put up, I understand that this could prove a problem. The only thing is, we both will remain in employment until we can get settled in the new business, so we have an income every month coming in. What options are available? Business we have seen is worth 70k, but if we can would like to borrow a little extra for improvements etc

Many Thanks

Bean_Counter

Hi Andy,

Further to my posts yesterday to your question, do you have a business plan?

If you have no security to put up, you still have the assets of the business you are buying to put up against any loan you take out.

andystephens

Hi,

No businees plan at the moment, but I am working on producing one. So is it just a normal loan which is then secured against the business?

Mark7799

I think the hardest problem you will have to overcome is the fact it seems you are not putting any money of your own in and are looking for over 100% finance.

The business plan is a must - don't even think of applying for finance until you have this in place. What are you getting for your 70k, property? goodwill, fixtures & fittings? Have you seen accounts of the business to show how profitable it is?

andystephens

I know not to apply for finance until I have the business plan in place. For the 70k, everything is included. Are there lenders out there who will do 100% loans which would be secured on the business?

Bean_Counter

I agree with Mark, the bank or whoever are going to be looking for you to be sharing some of the risk. They will ask for personal guarantees as a minimum, but also be looking for you to invest something too. You said earlier that you have no security to put up, so you will need to be creative in demonstrating that you are taking some risk.

The business plan will need to be very strong. Demonstrate where your income and expenditure is coming from, how long it is going to take to pay back any loans, what happens if your income falls short of your estimates etc etc. There are loads of business plan models on the internet. The governments Business Link website and some and further links.

Try seeing if there are small business support groups in your area, or a local enterprise company who can offer advice.

andystephens

I can provide a personal guarantee, as I am confident that there will be enough money coming in, and that if things do go wrong, my partner and I are still working so we can pay back the repayments. With regards to 100% loans, who would consider someone in my position?

Bean_Counter

andystephens wrote: »

I can provide a personal guarantee, as I am confident that there will be enough money coming in, and that if things do go wrong, my partner and I are still working so we can pay back the repayments. With regards to 100% loans, who would consider someone in my position?

Sorry Andy, I can't definitively help you on that one.

If I were you, I'd try:

http://www.smallbusiness.co.uk/5.2.15/start-a-business/startup-funding/

http://www.startups.co.uk/What_do_banks_offer_startup_businesses.YXrYnNpoX8KDRw.html

to get some info.

However, I would seriously be looking through the local phone book and contacting funds in your area who can help. We have local enterprise companies here in Scotland for that purpose, and there will be several in your area I'm sure.

Also look at the funding part of the Business Link website I mentioned earlier:

http://www.businesslink.gov.uk/bdotg/action/layer?r.l1=1073858790&topicId=1074034001&r.l2=1074453326&r.s=tl

andystephens

Another stupid question but what is the difference between business loan and commercial mortgage? Would a commercial mortgage work for me?

Bean_Counter

andystephens wrote: »

Another stupid question but what is the difference between business loan and commercial mortgage? Would a commercial mortgage work for me?

That's not a stupid question, as I don't exactly know the answer. I would guess that a commercial mortgage is a business loan secured on a commercial property, whereas a buiness loan is a more generic term.

I would guess that in your position you could use the terms interchangably as any loan you would get would be secured anyway.

Mark7799

A business loan can be unsecured, a commercial mortgage is usually a loan secured on a business property - unless there are some tangible assets within what you are buying, it's doubtful a commercial mortgage would be appropriate.