Help Needed ASAP Please!!!!

ksha

Hello,
I've got a real problem that is just causing me so much heartache.

To put you all in the picture, I've got a business (I'm 20) and it's a shop - has been going well and we are approaching the 2nd year in oct. Unfortunately when we sought advise for the amount of money to loan to start up, business plan in hand; we got told by both our bank and accountant that £15,000 would be enough and that remortgaging wwas the best way to go.

My parents remortgaged and borrowed that amount and the bank manager gave me a £5000 overdraft. Two days before we opened, the landlord decided we were too much of a risk and ordered us to hand over £5000 to protect him from our default as well as 3 months rent in advance.

Anyway the long and short of it is that we ended up having to use a credit card to buy stock up front because no one gets credit as a new business and all the money that we had borrowed was absorbed before we opened our doors.
Consequently, the shop went well and we've had to expand to fill out the shop and increase turnover - management accounts have been done and show a small profit for year one.

Takings dropped for the beginning of this year owing to a superstore opening up in the town which has killed the highstreet but now things are improving.
Currently the o/d is at its limit of £20000 and i've creditcard debt of £10000.

I've gone to the bank on about 6 occasions over the past 2 years to request loans but instead they just increase my overdraft.

I have to get out of this situation as cheques are being returned and all the money I earn is absorbed on the £800 a month i pay in charges.

I just don't know what to do - mum and dad can't really remortgage again because they will have to pay £3000 to get out of their existing one and because of a cc payment being late and then subsequently bounced ,my mum has had her credit affected.

I just don't know the best thing to do as Its ruining my life and my parents.

I've got three years left on my lease and otherwise business is good.

Is a secured loan the only option?

Please help - i don't really know where to turn next.

Plus my rent is due out on the 25th.

The bank will not consider lending to me because my 'behavioural score' is 2 points too low.

I really would appreciate any help or advice.
Many Thanks in advance
ksha

poppy10_2

More details pls. What kind of business is it?

ksha

I've got what you could call, a 'lifestyle store' - the only one of it's kind in my town. The business isn't really the problem - but the debt is!
Ksha

sammy115

I am curious as to how the deposit to your landlord is held. When do you get it back? Does it gain interest? Is there a written agreement in relation to the deposit.

Also this kind of debt is really no different to the debts that are personal. You need to post an SOA (see SS's sticky at the top) showing your incomings and outgoings and your debts and their APR's...

Do you have any kind of cashflow forecast that you have drawn up for your business.

poppy10_2

An adult shop???

knowledgeman

ksha wrote: »

I've got what you could call, a 'lifestyle store' - the only one of it's kind in my town. The business isn't really the problem - but the debt is!
Ksha

If the business isnt the problem you wouldnt be in debt:rolleyes:

Mad_old_tory

knowledgeman wrote: »

If the business isnt the problem you wouldnt be in debt:rolleyes:

Hardly, it takes money to start up businesses, which means debts in the first few years even if successful.

ksha

Well the deposit is held in a very low interest account - he's got 5000, until the end of the term (another 3 years) or after seeing 3 years of good accounts. And no, the business is not the problem, we're busy - it's the cost involved in the setup and not borrowing enough which has got me to this position. I've got incomings and out goings on a spreadsheet which i can post when i get a chance - i would really like to know what my options are as regarding borrowing. Thankyou all for your input so far!
k

ksha

No not an 'adult shop'!! I should have phrased that better!! Basically we sell all kinds from gifts to jewellery to clothes to homeware and kids stuff - a one stop shop if you like!!
k

No_more_credit_thanks

Most new businesses stuggle to be solvent within the 1st year or two despite making a profit. Your business plan must have been good enough for the bank to approve a loan in the first place, they don't take big risks with new business.

Your overdraft is possibly better than a loan in your case as you only have to service the cost rather than pay back capital which and you don't currently have the funds as the problem seems to be cashflow, do you have a cashflow forecast set up? if not do one asap. (i can e-mail you a template if you wish)


Are you paying yourself a wage, if so can you reduce this?

Can your suppliers give you credit now you have got to know them? say 30 or 60 days.I assume all your customers pay in cash and even chq/card payments only take 2-3 to clear. This would help you improve your cash flow.

May i ask how much your turnover & profit were to give an indication of the size of business to your loan.

cheers

No_more_credit_thanks

Just another thought.

Do you have an accountant?

If not get one to have a look at your books for you, if you can't afford one. Contact a local college or accountancy training firm (BPP for example). Students need evidence in order to prove experience and some people training can't get it in their workplace and may do this for nothing or a nominal fee.