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Business start-up loan - is this something im allowed to do?
My partner and I are looking to buy into a franchise, and have done lots of research and business plans are ready to go.
Having contacted the banks and been told we would probably get a loan under the Finance For Lending Scheme (a government scheme which will guarantee 75% of the loan for the bank, so that small businesses with low security/assets are able to get loans).
We have however been told that we would need to prove 30% ourselves so for a £32,000 loan we would have to front up £9600. We dont have £9600 but we do have a pair of relatives who are pretty well off and might consider loaning it to us.
Now, my questions is: THEORETICALLY could we not tell the bank we need £45,700, thus having to front up £13,000 (borrowed from the family member) and the bank would give us the other £32,000.
After receiving the loan of £32000, we just give the family member their £13000 back, thus leaving us with *ONLY* the £32,000 we originally needed and not having 2 separate loans or having to find £9600.
Just to be clear, the business is franchise which has shown very promising results (and ive seen financial statements and accounting for other franchises so i know its genuine). The business stands to make a profit of £65000 in its first year, and projections more than double in the next year. I know that not every franchise is going to be that succesful, and that those figures are probably optimistic, but i anticipate that i will definitely be able to pay off the entire loan within the 5 year time frame, with no problems at all - im just struggling to get the capital at the moment.
Any ideas? I just want to know if the theoretical way of not having to raise the capital is possible. Please dont be mean - im asking because i genuinely dont know if that is something that can, or should, be done.
Having contacted the banks and been told we would probably get a loan under the Finance For Lending Scheme (a government scheme which will guarantee 75% of the loan for the bank, so that small businesses with low security/assets are able to get loans).
We have however been told that we would need to prove 30% ourselves so for a £32,000 loan we would have to front up £9600. We dont have £9600 but we do have a pair of relatives who are pretty well off and might consider loaning it to us.
Now, my questions is: THEORETICALLY could we not tell the bank we need £45,700, thus having to front up £13,000 (borrowed from the family member) and the bank would give us the other £32,000.
After receiving the loan of £32000, we just give the family member their £13000 back, thus leaving us with *ONLY* the £32,000 we originally needed and not having 2 separate loans or having to find £9600.
Just to be clear, the business is franchise which has shown very promising results (and ive seen financial statements and accounting for other franchises so i know its genuine). The business stands to make a profit of £65000 in its first year, and projections more than double in the next year. I know that not every franchise is going to be that succesful, and that those figures are probably optimistic, but i anticipate that i will definitely be able to pay off the entire loan within the 5 year time frame, with no problems at all - im just struggling to get the capital at the moment.
Any ideas? I just want to know if the theoretical way of not having to raise the capital is possible. Please dont be mean - im asking because i genuinely dont know if that is something that can, or should, be done.
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Comments
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The bank will want to see a business plan showing financial projections and a cashflow and that will form the basis for how overall funding you need and therefore how much they may be willing to lend to you.
Presumably your projections/business plan will show a funding shortfall of £32k if that is the amount you actually need?A smile enriches those who receive without making poorer those who giveor "It costs nowt to be nice"0 -
The bank will want to see a business plan showing financial projections and a cashflow and that will form the basis for how overall funding you need and therefore how much they may be willing to lend to you.
Presumably your projections/business plan will show a funding shortfall of £32k if that is the amount you actually need?
The business plan does include all that information. The funding required is broken down into:
-Franchise price (+ vat)
-Set up costs
-Marketing
-Salary for myself for 6 months.
Which adds up to £32k
If a salary for 12 months was included as opposed to 6 months it would bring the figure up to almost £40K.0 -
Never a good idea to start a business by committing fraud.
Be truthful in all your applications and paperwork otherwise it will come back to bite you hard!0 -
Why all that rigmarole ?0
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