Business Start up and Mortgages

custhasno

Hi I am looking in to starting my own livery yard (Stables) and want to find out how the whole business of having a home business works (yard and house are one site) in relation to financing and mortgages.

I am currently not a home owner and my wife and I are saving the deposit at the minute. I'm looking at this now to make sure I couldn't save a little extra and get a much higher priced property with stables and yard to run a business from. Are there set capital % required for business star up loans or mortgages that differ form normal mortgage deposit % requirement?

Thrugelmir

How will you service the loan ? From the livery business or from other employment income?

holly_hobby

This is commercial business, you need to see a commercial broker.

If its a current business, you want and need to see the current books, you're looking at any trends ie declining profit, and if thats the case, consider if its down to poor management and/or how you will turn this round. If the profits are consistent and/or improving, consier will you retain this level of business post sale (ie thinking along lines of "loss of goodwill" when the vendor no longer runs or is involved in the business etc).

Essentially you'll be looking at:-
- a min deposit circa 30%
- the bank will want to see historic trading figs if you're retaining the business
- a robust business plan for presentation, ie current turnover, estimated turnover, how you intend to maintain and attract business, improve business and profits etc (so prev experience of running a livery yard inc business and profit planning will certainly help you)
- if you don't have pre livery experience, the bank will want to know why you think you can make a success of a livery yard
- will both of you draw a wage to run it, or are 1 of your keeping your own job and income ?

The above are only a few areas they'll want to explore ...

A commercial broker will typically have an upfront fee, as the amount of work involved in placing commercial business can be exhausting, and can often amount to no mge offer....

So, my advice woudl be in the first place to approach your current bankers (if they have a commerical division), they won't normally charge an upfront fee, and will give you a good idea on what you'll need to provide to them (your business adviser will probably assist), to have the application fully considered (brief list above.) - if they decline on the info provided you may want to consider if they've been harsh or in reality this is going to be difficult for its placement generally.

You can then, if you are offered a deal, see if you like the rates (typically svr & min 2.5%+ as it'll offically be a semi-commerical arrangement), or decide to then approach a broker, and see if they can beat the loading and fees you're been offered by your own bankers.

This will be a long road , but hope this helps get the ball rolling ....

Hope this helps

Holly xx

custhasno

Thanks for the info.

We have 80% of our business plan in place, most of the costing done.

We plan to have myself work the yard, My wife will retain her full time job and we will hope to service the loan from her wages primarily. As far as me pulling a wage from the business I'd imagine the bank will want to see some provision for living expenses but if it helps secure the loan I will happily not take a wage.

I was curious about having a business we live in and if this would impact the process of securing finance. So if we see a Farm going for 150k we wont be able to get a regular mortgage from our bank to buy it and operate form it as a residential property (we are in Northern Ireland)?

At present we have only been keeping an eye on-line for properties that suit our purposes, most are already livery yards or small farms, with yards and stable blocks. Which could be converted for approx. 5k to a fully compliant livery yard. These properties seem to be around 150-250K

I am tending towards the farm option, with a view to the future and the option to either produce on a very small scale or establish a petting zoo. I'm going in to this with the long view of having three self sufficient and independent sides to the operation, with Livery, Tourism and Farming.

holly_hobby

If there is a business run from the prems, this is not residential finance.

If you live at the business, then its at best classed as semi-commerical business.

Essentially the bank will want to see that the business is or after initial start up, will be self sufficient - so turnover (maintenance, improvement, or how you will achive it full stop if a new venture will be primary).

If this is a complete start up (ie not taking over an existing business, with existing clientel etc, ) it will require an aboslute blinding business plan in view of the reigning in of banks on commerical finance.

Hope this helps

Holly

chalkie99

holly_hobby wrote: »

the reigning in of bank on commerical finance.

For a livery yard ....:rotfl: Very good!

Sorry, couldn't resist.

holly_hobby

chalkie99 wrote: »

For a livery yard ....:rotfl: Very good!

Sorry, couldn't resist.

Wondered if any one would pick up on that :rotfl:

Gold star to you ... x

H x

custhasno

thanks for the info