What type loan-or who do I loan from?

nndh1_2

I've recently ceased trading at my previous premises to relocate to somewhere larger and with higher footfall. Unfortunately it wasn't possible to stay where we were for an extra few weeks due to a few concerns we had and as the LL and I couldn't agree on a duration (he would only let us renew our contract if we stayed until a certain date which was to long for us) and now due to delays with new premises we've ended up without anywhere to trade for approx. 2 months.

Whilst we are selling on line (although this isnt directly linked to our shop ie. a different trading name but still part of business) we are just making enough to pay all our household bills at the moment, but in a position of needing a loan to complete the contract (the new LL has asked for an abortive legal fee) which we will be getting back when we move to the new premises (providing all goes ahead). We also require ideally some further finance towards new fixtures and fittings and a small top up of stock.

We require around 4-5k(max), but could manage on 2-3k.

We hold a fair amount of stock (we're only a small business) approx 20k (wholesale value). The business is 20 months old.

Ideally a loan for up to 3 years, depending on amount borrowed.

Both my partner and I have just an average credit rating.

I've had a look at Zopa but fear we maybe rejected as I've read around 80% of applicants are turned down. Does anyone have any recommendations for lenders? Or perhaps type of loans against stock? We are both quite clueless where to start in this area and worried if we get rejected it could go against our next application. Any advice would be appreciated. Thanks.

gb12345

As the loan is for business purposes, you can ignore any personal loans as they can not be used for business.

Your own bank would be the best place to start.

chalkie99

As you already have a business then your own bank is certainly the place to start as they will be able to see your trading history although they may want to know how you can justify expansion if your previous location has not generated a surplus.

Interestingly just as I was reading your post, there was an interview on BBC Breakfast with a man who buys surplus stock from shops in difficulty (he has a program on Channel 4 tonight) and he pointed out that stock is valued at very much less than you might hope. It is therefore not going to be treated as a great asset when a loan is assessed.

With the huge number of businesses going under which the program man assured us was still ongoing despite government talk of a recovery, make sure you scour auction houses and the like for fixtures and fittings and approach shops where you see closing down sales in progress.

nndh1_2

We don't have a business account as advised by our accountant mostly because much of our business is cash buying and sales as we deal in vintage and antiques. I'd rather my bank didn't have a cut of that uneccessarily.

Also not sure why you'd presume we didn't succeed at our last premises? It was due to different reasons we left. Landlord ripping us off etc.

Thanks for the advice but we deal with auctions weekly as our business is vintage and antiques, auction houses very rarely have shop fixtures and fittings and if they do they're not a bargain. The type we'd be looking for are industrial style which are very desirable right now. Were quite aware there are businesses struggling, however media doesn't always give a full picture and obviously many of these salvage and vintage shows are incredibly misleading. Anyway that's a debate nothing to do with my original question.

Can anyone recommend loans?

Tixy

How long has your business been trading?

You can approach a different bank for a business loan if you don't want to try your current bank for some reason. They may well want you to set up a seperate business bank account at the same time, but I disagree with your accountant it is always best to have a separate bank account for business transactions.

You could also possibly ask your accountant for suggestions. They may know of local loans that could be available or which banks are most likely to loan for the purpose you want.

Brock_and_Roll

Lets not beat about the bush here - it is tough to get a business loan these days, perhaps rightly so given the problems the banks got themselves into from loose lending.

If you want a "business loan" you are going to have to approach a lender with a full financial package - historic accounting information along with a well-written business plan that assess profitability and cash flow going forward over the next 5 years demonstrating your ability to make the repayments. Several different scenarios - good, average and worst-case would also be good.

Alternatively you could sell some stock (online? in the trade?) - if you have £20k tied up in stock, but can't manage to scrape together £2/3k, then the businesses liquiidty is questionable - it is lack of cash that busts businesses, not lack of profitability. Obviously I understand that it is the very nature of the antiques business that you are likely to have a lot of cash tied up in stock.

Best of Luck

chalkie99

The business is 20 months old

We don't have a business account

much of our business is cash buying and sales

Put yourself in the position of a lender.

You're self employed so can't supply pay slips, you don't put your money through the bank so can't verify trade with bank statements and you haven't been trading long enough to supply 2 or 3 years tax statements.

It pretty much leaves you with selling some existing stock to raise funds for the essentials, selling any [STRIKE]unwanted[/STRIKE] unneeded possessions or asking friends and family.

BTW, there is a whole world of auction houses which have absolutely no connection with antiques or vintage and plenty of fixings of all types which can be picked up for a song if you hunt around.

Personally, I would get a new accountant.

gb12345

nndh1 wrote: »

We don't have a business account as advised by our accountant

You are probably breaking the T&C of your personal account, so don't be surprised in future if you are given notice that they are closing your account (or even have it frozen because the bank thinks all the small cash transactions look suspicious).

You can often get introductuary free business banking, so there really is nothing to stop you from doing things properly.

nndh1_2

I attend various auctions, not just vintage and am aware my situation isn't ideal which is why I've come on here hoping to get some helpful advice.

I'm currently selling online but due to the nature of what I sell doesn't sell as fast online and my new product is just too competitive online competing with amazon etc. My online side of the business is really just a top up to income, I'm very much a shop where people like to see the product in the flesh and through no fault of my own am without a shop for 2 months. I really just need money as a bridging gap/loan.

My business transactions don't go through my account so I won't be breaking T&C's.

gb12345

If your business transactions aren't going through your bank, where are they going (are we talking cash - I'm beginning to imagine Steptoe and Son here )?

if you are unable to show that the business is actively trading (i.e. money coming in), then lenders are going to be very wary.

They will normally want to see statements (in addition to your business plan), but you've got nothing to show them.

nndh1_2

It's all above board, we have receipts for EVERYTHING. We log all of our sales and hold an average at moment of 20K of stock which obviously fluctuates, which we've built in 18 months, we plough everything back into stock as we want it to work and want it to grow and take it very seriously. I can appreciate perhaps not everyone can understand that but not all businesses work the same way. Our accountant is excellent and was recommended to us by several people, perhaps he's just more open minded than some and understands our business.

Anyway, I think I'm starting to sound like I'm justifying myself when I know what I do is all above board, I just need a lender who can perhaps see beyond the norm and see that our business has grown uite a lot in a short time and see's that the shop move is beneficial (moving from a village to a city centre) and is a positive step forward, we just need a temporary leg up. We're not talking 50k here, we're talking 2-5k.