New Business Loan

dingbat1_2

I started my own business last year and to do so had to take out a couple of loans to afford to buy everything I needed to get set up. Now I want to try and pay all my separate payments off and just pay everything back to one person i.e one bank or lender rather than having several things coming out every month.


I feel at the minute I am paying out a lot and by taking out a loan to clear all of these and pay back to one lender it will free up a lot more money each month for the business.


Does anyone know if there are any banks who are willing to lend to new businesses as i've looked all over the internet and cant find anything. Most require at least 2 years tax returns and I haven't been in business that long yet to be able to provide this. I also don't own a house to secure the loan against, the only thing I own really are my van and tools.


Any advice would be much appreciated.


Thanks

Gaz83

It's a form of debt consolidation you're looking at. And that's not something that mainstream lenders look too kindly upon, for the reason that you might not use your new loan to pay off your old ones, and instead end up with twice as much debt.

Your best bet would be to fire as much as you can at the debt that has the highest rate of interest.

somethingcorporate

Are you sure running a business is right for you if having to pay back multiple parties is worrying you?

What about having to pay multiple suppliers or take cash from multiple customers?

I genuinely don't see why having one person to pay makes any difference, least of all to a business.

dingbat1_2

Yes that's the only other thing I thought I could do, the problem ive got is at the minute I pay out in total around £500-£600 a month....some months it can be more and as a new business that's a lot really. I thought if I could get a business loan I could cut that cost to around £200-£300 a month and the rest would then be profit which can be given time to accumulate and build up.


I looked into debt consolidation places but that affects your credit score and can make it difficult to get finance in future and I don't really want that to happen as you never know what might crop up in the future. If I got to a point where I wanted another work vehicle it may stop me getting it on finance or lease etc... this is why a loan would probably be better but I cant find anyone who seems to be prepared to lend to new businesses.

Gaz83

dingbat1 wrote: »

I looked into debt consolidation places but that affects your credit score and can make it difficult to get finance in future and I don't really want that to happen as you never know what might crop up in the future. If I got to a point where I wanted another work vehicle it may stop me getting it on finance or lease etc... this is why a loan would probably be better but I cant find anyone who seems to be prepared to lend to new businesses.

You misunderstand. What you are looking to do - by getting another loan to pay off your other loans and having just one payment - is debt consolidation, even though you're trying to do it through a legitimate lender.

dingbat1_2

It's not that I have an issue with paying more than one person, or dealing with more than one customer etc, as I do this on a daily basis just fine. Its just a way of reducing my out goings as effectively as possible without having a black mark against me for the future.

dingbat1_2

Yes that's what I thought it was debt consolidation, but when I looked into it the place I discussed it with told me they would tell my creditors I would no longer be making payments to them and that they would deal with it and I just pay them x amount every month.


That wasn't really what I wanted as I DO want to pay my creditors, i just want to consolidate everything so I pay less out each month.


I guess the best way would probably be to ring around and see what banks can offer, I just thought someone on here may have been in the same position ad knew of something available to new businesses.

Gaz83

dingbat1 wrote: »

Yes that's what I thought it was debt consolidation, but when I looked into it the place I discussed it with told me they would tell my creditors I would no longer be making payments to them and that they would deal with it and I just pay them x amount every month.


That wasn't really what I wanted as I DO want to pay my creditors, i just want to consolidate everything so I pay less out each month.


I guess the best way would probably be to ring around and see what banks can offer, I just thought someone on here may have been in the same position ad knew of something available to new businesses.

I see. That sounds like a Debt Management Plan (DMP) and is usually one of the last steps for individuals who are possibly en route to bankruptcy - it's for people who are in a precarious financial state but don't want to 'give up' just yet.

The best way would be to just pay as much as you can to the debt with the highest amount. An option would be to set up a new bank account solely for repayments. Set up your DDs to come from this new account and just make one payment to this new account each month. That way you're still (kind of) making just one payment and it saves the hassle of consolidation or DMPs.

Remember that chopping down that monthly repayment has the effect of lengthening the term, so you're paying off for longer.

Opinion

dingbat1 wrote: »

Yes that's the only other thing I thought I could do, the problem ive got is at the minute I pay out in total around £500-£600 a month....some months it can be more and as a new business that's a lot really. I thought if I could get a business loan I could cut that cost to around £200-£300 a month and the rest would then be profit which can be given time to accumulate and build up.

What interest rates are you paying if you can HALVE your payments by consolidating?!?!

chesky

Should you not have already discussed this aspect of running your business with your accountant? It's what you're paying him for.

bundrell

chesky wrote: »

Should you not have already discussed this aspect of running your business with your accountant? It's what you're paying him for.

completly agree with you