Best advice for business loan?

karl_jackson

Hi there
looking at a retail business for sale at the moment
quick overview of the business and related details
these are not the actual figures but will help me to decipher where to go next

I need to raise £220000 to get through the door
the business is doing well with net profit of over 100K in last 3 years

if i had 40k to put into it, i still need to find 180k

i have tried Barclays who i have banked with for many years but they have offered a loan called 'regulated mortgage contract' at 4% based on using my home as security but only on a 70% loan to value on the value of the house.Their costs seem high as well at 2% arrangement fee.
This could leave me with a shortfall and expensive costs as they also want £500 valuation fee, and guarantee loan fee of £300.
There are also other 'external' fees like solicitor fees and land registry fees i know which are un-avoidable.

Does anyone know if or where there may be lenders with a better loan to value rate, and less charges? or any advice please.

Thanks in advance.

bengalknights

Try business angels and local business enterprise associations who may have more suitable lenders

Arleen

I am amazed that Barclays offered you anything in the form of a loan for this idea, guess your house must be worth quite a lot.

But besides that, you will not be getting a loan for such insanity, because buying a retail business for 220k on the notion that it nets 100k+ a year (and will continue doing that) is way past the naive Avenue and well into the insane lane. Especially retail store, because that also must include stock, employees, warehouse rentals and a lot more.

Don't bother with business angels/business enterprise associations, you won't even get through the door with that idea for a business.

karl_jackson

thanks for the reply
may be i was not specific enough and it does'nt read right
the net profit is over 100K each and every year not over the 3 years
Sorry if that has lead to the last post reply.

Arleen

karl_jackson wrote: »

thanks for the reply
may be i was not specific enough and it does'nt read right
the net profit is over 100K each and every year not over the 3 years
Sorry if that has lead to the last post reply.

That's exactly the lunatic part out of it. Did you even check the actual books? What's the turnover? What's the gross? What's the net? How much are employees and stock each year?

karl_jackson

yes, done all the accounts work and all checks out ok
business will be leashold
Turnover over £500k every year
Gross Profit over £250k every year
Money for stock is circa 60k included in the equation
the type of business has on average 40% margin

i'm trying to state things general terms and not list the accounts as forum advice says don't be too specific on details

Arleen

karl_jackson wrote: »

yes, done all the accounts work and all checks out ok
business will be leashold
Turnover over £500k every year
Gross Profit over £250k every year
Money for stock is circa 60k included in the equation
the type of business has on average 40% margin

i'm trying to state things general terms and not list the accounts as forum advice says don't be too specific on details

Safe enough no one will be stealing this "fantastic opportunity," you can be as specific as you want. And from those numbers, you will need a lot more than 220k because you also have to keep it afloat for at least a year and have money for the stock. And that will be about 100k+ by the numbers you've provided. Will you have spare 100k+ after buying the business?

And to understand why this is an insane idea, you have to figure out why it smells. If someone has a business that nets him over 100k ever year by year, why would that person, ever, sell it for mere 200k? If he needs cash inject quickly, he could easily get a loan and back it with stock + future sales. If he doesn't, then he can ask a lot more for a business that nets, and will keep netting, 100k+. So something here is amiss, as it always is with those "too good to be true" deals.

DCFC79

Why is the owner willing to sell ?

Is it an independant store or 1 of these franchised stores ?

karl_jackson

dcfc79

stores are independant and owners (who i have met) are retiring age

Gambler101

Ive seen some insane loan requests but this is super insanity.

jonesMUFCforever

karl_jackson wrote: »

yes, done all the accounts work and all checks out ok
business will be leashold
Turnover over £500k every year
Gross Profit over £250k every year
Money for stock is circa 60k included in the equation
the type of business has on average 40% margin

i'm trying to state things general terms and not list the accounts as forum advice says don't be too specific on details

What is the NET profit?
Have you seen the accounts for at least the last 3 years? What was the total of the capital at the end of each year in the accounts?