Secured Business Loan

johnsmither11

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IAmWales

No, you can't use fabric as security for a loan, not least because if you defaulted the goods would be sold at auction for far less than your valuation.

It all sounds like a nightmare. I'd stop throwing good money after bad.

Richey_

Sounds like an advertising pitch....

johnsmither11

Not advertising, I appreciate the responses. I'll seek professional support.

Richey_

You have essentially tried to sell some cloth that you value at £6-7k with links, photographs etc which you think as a job lot are worth £5k. It was a clear sales pitch.
You have invested £150k and have all this income from a solar panel. Surely if it is this good a business a bank will snap at a chance to own part of your domain name as a business loan rather than owning this piece of cloth?

The fact you removed the initial post confirms it is somewhat fishy.......

DCFC79

Wonder if someone will post up the deleted post.

chalkie99

johnsmither11;discussion/5656315]Hi,

An opportunity has arisen for our business to purchase a rare (profitable) domain name and needs financing to do it. I've never taken on debt before (not that I am naive, just didn't have the need), and thus am in need of some pointers.

The business is high technology (web based software) and I put £150k of my own cash into it, which has been spent (it was used on R&D). As such, the business hasn't had any revenue or profit for the past 5 years, whilst it has a P&L account of -£50k (no corp tax on next 50k profit) with HMRC and outstanding director's loan of £112k (from me). Previous to this, the business made continued profits & revenues selling small software packages (£100k profit in 2011).

I can write off the director's loan if necessary, meaning the company is completely clear of third party debt, but has no cash or current revenue. I personally stayed with my parents all the time it was R&Ding and have no external debt, but little earnings (as I focused exclusively on the R&D). My parents own their home, have sizeable savings, pensions and a profitable solar contract with the government (50p per KwH - they keep getting people calling to try and buy it off them).

I don't have any discernible assets (house/car) but the business does have 500m of some of the most luxury shirting fabric in the world (Alumo). You can see testimonials of its quality here (askandyaboutclothes.com/forum/showthread.php?82259-Alumo-fabric -- "In terms of quality, Alumo is the best. Second best is Albini (Thomas Mason DJ Andersen line).") and here (apparel-guide.com/alumo-fabrics/ - "Alumo is a Swiss mill based in Appenzell. It produces the highest quality shirtings (according to Alexander Kabbaz, the best ones in the world – though not all shirtmakers agree with this opinion)"). The business paid £6.3k for the fabric 6 years ago and has been kept in pristine condition.

My question is this:

Would I be able to "secure" a loan against this fabric? It certainly has market value (there are two rolls in particular I know will do very well - pure white popline and pure black). I'd estimate you could get £5k for it as a job lot but I have no idea how loan financing / security works. I'd be happy to put the fabric up as collateral but don't know how they'd value it etc.

I'd be looking to raise around £7k.

Thanks in advance for any responses.

Quoted for those, like me, who find it annoying when someone deletes their post when they don';t get an answer they like.

From your original post -

I put £150k of my own cash into it, which has been spent

the business hasn't had any revenue or profit for the past 5 years

The business paid £6.3k for the fabric 6 years ago

Read those bits again until it starts to sink in.

You blew £150,000 and have had no revenue for 5 years. Materials bought 6 years ago have lain idle.

Most industries have moved on in that time and I would suggest it will be practically impossible to find an investor.

johnsmither11

Thanks for the responses, I removed the post because I'm not interested in financial advice and wanted to remove any potentially identifiable information. And no, I wasn't trying to sell the fabric.

You can call the £150k however you want. Not how I hoped / planned, but certainly not the doomsday situation you're alluding to. The domain is an extension to it but I was unsure about the debt, that's all.

I'll speak to someone I trust about it.

chalkie99

johnsmither11 wrote: »

Thanks for the responses, I removed the post because I'm not interested in financial advice and wanted to remove any potentially identifiable information. And no, I wasn't trying to sell the fabric.

You can call the £150k however you want. Not how I hoped / planned, but certainly not the doomsday situation you're alluding to. The domain is an extension to it but I was unsure about the debt, that's all.

I'll speak to someone I trust about it.

Brilliant!

You posted a thread in the "Loans" section entitled "Secured Business Loan" asking if you could borrow £7,000 against stock of doubtful value but have now come back to say

I'm not interested in financial advice

johnsmither11

Sure -

I was expecting someone to say whether they had experience of a similar situation RE securing debt against "stock of doubtful value" (although it's patently worth something, probably not near what was paid - hence why I included specifics). Perhaps something akin to "Yes, I tried that once and was laughed out", but that one guy even thought I was trying to sell it.

I included the other stuff about the situation (£150k etc) to give clarity to financial standing. I wasn't interested in opinions of my decisions as I know the majority of people will just write it off as "lost" etc when they have no idea of what the money was used for or what it means now.

Anyway, thanks again. The big thing I got from it was that the stuff is sent to auction in case of a default so will realize pittance (probably £1.5k). I'll see about things moving forward.

DCFC79

You didnt give it a decent chance to get replies, you only gave it 1 hour 17 minutes before you decided to delete the OP, if you want advice should really give it longer.

What if the person you go to see says its a non starter, will you just accept it and move on ?