New buisness loan or investment needed!

Lauren2711

I am trying to set up a new buisness and feel there is a gap in the market however I am currently 4,000 in debt this is on a 26month balance transfer credit card but need money approx 5,000 to start me up and worried to add this amount to another credit card.
I am concerned about doing this incase the company doesn't take off, i am also on maternity leave and my income is not great only £545 per month dwpmaternity grant.
I am worried if I dont take this opportunity i will return to work and always have wondered and regretted not trying.

Is there any buisness loans which you repay once you start to make a profit or any investors you could reccomend? P.s already applied to dragons den!

Any advice will be appreciated

gb12345

Any lender is going to want to see some form of financial commitment from you to match the amount that you are borrowing and even then it will be difficult to persuade a bank to back your idea.

When do your business plans say the business will be profitable?

MEM62

It might help if you provide more detail and a broad idea of your business plan. Any mainstream lender is not going to look at any funding unless you at least match the amount invested. You may find a venture capitalist willing to take a risk if you are lucky but I don't think that your current circumstances will allow you to pursue this opportunity.

Lauren2711

Yeah I am willing to invest what I have and have currently paid £410 patent search and £1800 to design so im hoping the bank will see this as positive and maybe help me out.
Dont think it will make a profit until next year hopefully think I will set myself a goal like yourself :-)

DevCoder

Sorry to go all Dragon's Den on you but what is your predicted

Turnover for the next 3 years
Gross Profit for next 3 years
Net Profit for next 3 years

Tixy

Have you prepared a detailed business plan and financial forecasts?

A lender will consider the proposition based on those not on your current income.

They will want to see that the business can afford the loan repayments even if it is not profitable for the first period.
Banks do offer business loans with capital repayment holidays, that is you only repay the interest for say the first year and don't start repaying the loan captial at first.

Depending on your circumstances have you considered seeing if there are any grants or low interest loans that you would be eligible for (e.g. are you eligible to apply to the princes trust depending on your age and proposed business)? If you have not run a business before or if you do not have a proper business plan and projections the princes trust also offer business support/mentoring.

Thrugelmir

Lauren2711 wrote: »

I am trying to set up a new buisness and feel there is a gap in the market however I am currently 4,000 in debt

Not the ideal situation to be in to take a gamble. Perhaps better to wait a while. Get yourself in a better place financially before starting a new venture. With a new business things rarely go as planned.

CKhalvashi

You'd be looking at investment, not a loan, in these circumstances.

Seedrs would be my first port of call, to see if anything similar was funded by them in the past.

CK

Lauren2711

I am currently not sure what the manafacturing costs will be as it hasnt came to that stange yet so unable to provide expected profits etc as im unsure what costs of materials will be.
I think i will look at investors instead of loans so thanks everyone for giving me info on these, or i might maybe ask my dad to lend me some money as i dont want to give up once i get an idea in mind i cant stop thinking about it, i think i have my head screwed on so wouldnt allow myself to get in over 5,000 debt so if i had to stop it was manageable if i had to return to work.

gb12345

Lauren2711 wrote: »

I am currently not sure what the manafacturing costs will be as it hasnt came to that stange yet so unable to provide expected profits etc as im unsure what costs of materials will be.

Investors or lenders are going to want to see a solid business plan before they even consider handing over a penny.

You need to put together the business plan first and to do that you need to know the costs of materials and manufacturing. Once you've done that then you can think about looking for financing.

Tixy

If you don't know the cost of materials or production then you don't know if you have a viable business. You may not be able to supply the product at a price less than people are prepared to pay for your product.

Perhaps that could be why there what you perceive to be a gap in the market? because other people have identified it but discounted the idea based on the lack of a potential product.

You need to do a lot more work on researching the viability of the business before you start to look for funding.

Just as an aside - are you currently employed but on maternity leave? if so will your current employer be ok with you starting a business during your maternity leave? does your contract state anything about you having to inform them /get their consent to engage in other work?