Starting a small business

jlx45v

We want to start a cattery business. However, I'm confused at what sort of funding to apply for and where is best to find the funding.

We have already found the ideal property which has a clause 52, the outbuildings must be used for commercial use, which suits us because that's what we want!

I have a business plan, including the projected income once the property (commercial side,not the residential side) is converted and licences gained etc, but I really need advice on the finance side.

I am an experienced cat breeder of 6 years, I am a part qualified accountant and currently work full time, and have beeno there 10 years now, in a multimillion pound turnover business in the finance section. I understand about all the licences I would need to apply for and gain, I have researched the turnover of other catteries across the UK, it's all in my business plan, along with a detailed analysis of projected income and expenditure.

Yes I can afford repayments, yes I have had experience of running a business (my parents business, but I still did the day to day running) and no, I'm not an idiot with an empty dream.

Currently my residential property is on the market, and I have had an agreement in principle for a residential mortgage of £55k and also aprox £65k equity in my home.

The property we have found is priced at £215k. It already has a clause stating the outbuildings have to be used for a commercial use to allow the residential part of the property to remain residential. Excellent, it means we don't have to get planning permission. I've already been in touch with the planning authority concerned and our business plan fits the criteria.

Somewhere I need to find startup funding of £150k (detailed in my business plan), because the property is not already being used as a cattery, so apart from location, suitability and the most important part, commercial planning permission we have to build the cattery part from scratch.

So.
My question.

What is the best way to fund the remaining £150k. Business loan, commercial mortgage ???

spadoosh

Im sure ive replied to this, this morning? Appologies you saw to post another to the appropriate area!?

Jlx45v wrote: »

As I said, I will be putting in £100k. I have already been accepted for the £55k mortgage.

I realistically need £149k - and yes, I can afford the repayments. Am I single? Does it matter?

I am a part qualified accountant so I already have access to that part. I already have advertising in place, along with a survey conducted by survey monkey so I know exactly what cat owners want in a cattery. I have already worked with Business Wales in various workshops they have. I have a full time job at the moment which I have been in for 10 years, in the sales and purchasing side of a multi million pound turnover business, so I guess you could say I have a little bit of experience in dealing with finances on a day to day basis.

I didn't realise asking a simple question like ' trying to find the best funding option' would render me some sort of dreamer! Talk about encouraging small businesses with negativity - thanks!

Didnt mean to upset you in my post. It certainly wasnt my intention to make out youre a dreamer.

I asked if you where single because it generally makes a difference when trying to borrow money. I wouldnt want information on your sexual preferences or how regular or anything. Just wondering if there is one person, two, on income or two? You kept on saying we, but £55k really isnt a lot for a 'we'. It suggests either unsecure (sole trader/new business) or low salaries.

Youre daily financial dealings seem quite impressive although must admit i feel uneasy that your initial port of call when you need to borrow money is not a bank? They tend to be the places that let you borrow money for a multitude of purposes, cars, houses, loans, business etc.

I would try a bank. I probably wouldnt try if i was in your position though as it seems unlikely.

Commercial/residential businesses are awkward to get finance for. Essentially it looks like your asking someone to lend you £150k when your only willing/able to stump up £120k (of which nearly half of that is borrowed so your only actually putting in 25%). Its a barrier straight away.

I doubt you would get a commercial mortgage as you do not have a business. You have the idea of a business. You would not get a business loan when you do not have a business. You could get a business start up loan but that would be secured against your property, which wouldnt have any equity in because it appears youre borrowing as much as you can.

The best way to fund the remainder is finding someone.

Im sorry im giving bad news but you can always try contacting your bank and speaking to them (theyre a lot more likely to lend you money than i am, though as mentioned dont think its too liely). Hopefully they could work something out for you. Just remember its easy to be optimistic when you want use someone elses money. You have to give them lots of reassurances there money is safe.

Brock_and_Roll

Hi OP,


Have read both your posts. To be honest this is a really tricky one - would have been hard even in the "good old days" before the banking crisis and is even harder now.


Best bet is to speak with a specialist broker to see if you have cats chance in hell ('scuse the pun) of getting finance - I note from a quick google search that there are few cattery specialists around.


My gut instinct (as a banker) is that biggest problem here is that it is not an existing business with a track record - as someone who works in finance you will appreciate the comfort people take in a history of reassuring numbers!

Ozzuk

Difficult I'd say, but not impossible if the house is the main asset you are buying. As others have said, talk to a bank, commercial mortgage sounds the most suitable but they will want a very good LTV (probably 70% max) and you'll pay a lot in arrangement fees. I borrowed a similar amount for a holiday let business many years ago, it was a commercial property I intended to live in (3 properties in one).

The interest rates on offer will also be a lot higher than the equivalent residential rate.

robbyfine

Getting a business loan would be the best option for you. Moreover, you've mentioned you have a business plan. Here is a great article on this issue - https://www.ogscapital.com/services/bank-business-plan . Good luck, friend!