Personal loan while dad at home

phillw

threedee wrote: »

Thing is, its all a bit catch22-ey - cant buy machinery to get money to buy machinery...

What is it you want to buy? What does your business plan look like?

threedee wrote: »

I COULD scrape absolute minimum cash required for the thing in question but that would severely damage familys finances if done this way.

What damage? Your balance sheet will look identical in either case, it will only affect cash flow.

threedee

phillw wrote: »

What is it you want to buy? What does your business plan look like?




What damage? Your balance sheet will look identical in either case, it will only affect cash flow.

Damage in the form of stress for next half a year while we recover to the levels we are at now. Optimists will go "but you'll be in business", i go "life happens and i'd rather it woudlnt happen tomorrow". Cautious, remember.


Update - plunked down deposit for machinery. Scraping was hard. Will have to rely on credit for daily life for now. See how that affects my credit... Never used CC for everyday stuff... Wish me luck.

phillw

threedee wrote: »

Damage in the form of stress for next half a year while we recover to the levels we are at now. Optimists will go "but you'll be in business", i go "life happens and i'd rather it woudlnt happen tomorrow". Cautious, remember.

Unless the seller offers zero percent credit or your savings are at a lower rate than you can borrow at then I'd use the savings.

Are you being realistic that you can recover the outlay in six months? What equipment is it?

threedee

Its a small manufacturing machine, not going to go into details. It apparently doesnt matter in grand scheme of things (or this topic).


Seller is an importer, doesnt deal in zeropercents and leasing.One third deposit, rest upon delivery.


So, it all ended up in being a "bank of brother" thing. Gah...


As for being realistic, etc... This hurts, it could have been avoided by spreading the pain thin enough not to feel it by getting a personal loan. Doing things the way i did them now puts a person in the position to get deep under if he's not well careful. It is not impossible, but makes me uneasy. I didnt go into debt. the "bank of brother" essentially did what "proper bank" could have done if taking my account on its merits, not on what i personally am at the moment (which is unemployed)...


This whole thing made me reflect on state of lending nowadays. Either "you are well enough to not need to borrow, or you're so under that we'll bankrupt you with rates" sort of thing...


And its the first time i'd even ask the bank for help. EVER. Before this situation i never considered to taking a loan. EVER... Loyalty my ****...

enthusiasticsaver

Banks are a business. They are lending other peoples money so they are careful and I for one am glad they are. Your brother knows you and is taking you on trust you have a plan to make the repayments but the bank doesn't. If you had produced a business plan it may well have been a different story but tough though it is to hear if you have no income, no formal business plan and no security then lending you £4k is not going to happen. It probably does not help that your wife's credit history is bad if you are financially linked as well. If you have never borrowed before that is not looked on favourably either as there is no history of well managed credit facilities.


Good luck with the machine and your new business. I am not sure it is a good call to ignore the regulations on informing the council you intend running a business from home.

I would also say I agree with your final comment about only borrowers who are reasonably well off or at least have a steady income getting the best rates. The higher rates reflect the higher risk of the bank not getting their money back. A credit union may be the way to go for you in the future.

phillw

threedee wrote: »

As for being realistic, etc... This hurts, it could have been avoided by spreading the pain thin enough not to feel it by getting a personal loan. Doing things the way i did them now puts a person in the position to get deep under if he's not well careful. It is not impossible, but makes me uneasy.

You're in the same financial situation, if the business doesn't go the way you planned then whether you owe the money to your brother, the bank or your savings pot then it's just as painful.

The only thing you could have done to avoid that is to not buy it. Starting a new business is a gamble, if you can't afford to lose the money then it's really dangerous no matter how you fund it.

threedee wrote: »

I didnt go into debt. the "bank of brother" essentially did what "proper bank" could have done if taking my account on its merits, not on what i personally am at the moment (which is unemployed)...

You did go into debt, just with your brother. Which will have different repayment terms and interest rates than a loan or an overdraft. I personally would have spent my own money first, because it sharpens the mind. Your brother could still have helped you out if you'd run into trouble.

threedee wrote: »

This whole thing made me reflect on state of lending nowadays. Either "you are well enough to not need to borrow, or you're so under that we'll bankrupt you with rates" sort of thing...

Well that is obviously false, because people wouldn't borrow if they didn't need to & higher rates don't bankrupt everyone. If you're a higher risk then they expect you to share that risk with them by paying higher interest rates.

threedee wrote: »

And its the first time i'd even ask the bank for help. EVER. Before this situation i never considered to taking a loan. EVER... Loyalty my ****...

Banks don't help, they provide services for a fee (whether it's direct or indirect). They don't owe you anything just because it's the first time you wanted a loan.

threedee

For the most part fair enough. I have been burned right after i started my first business RIGHT ON 2008, but not because of banks but because economy in general tanked. Didnt last long. Still, didnt borrow a penny.


Some philosophy incoming...

As for small business "business plans", i consider 99% of them absolute waste of time in real life terms, as NO ONE can predict future. Ambition is good but it has to be well weighed and mesured based on hard data, which you cannot do unless you actually already settled in business of question. Asking me to plan and GUARANTEE it before i even have my feet in the water is a bit much and unreasonable.


I know businessmen who started things in a garage even though back then they could have gotten loans easily. No vat, no paperwork. Only when they got a feel for things did they apply for loans to buy ADDITIONAL kit.


These days, unless your business is completely manual (as in hand made) you need kit up front to start.


My set of skills i'm trying to use require equipment that i cannot make with a hammer and nails. I know the market (of 5 years ago), have connections, have relevant skills. But even with just knowing market and having skills i cannot start and CANNOT PREDICT outcome - and thats what banks want me to do - predict future.


Granted, there are instances where all pans out, but flying by the seat of you pants on hail mary is not my thing. But banks wont allow me to fly by safe application of my skill and feeling safe at the same time.


At the end of the day, i will fly by my skill, "bank of brother", no debts (i'm certain of this). OR i can sit at home being a house husband for another 5 years at which point i will not be hireable due to ageism, (yeah, it exists) outdated market knowledge (its already wilting) and decline of relevant skills (which will happen)...


As i said, its all philosophy.


To be honest, i never relied on banks and i guess cant rely on them now.


As for credit union - right before last reply i was looking at exactly that.


Also, one point about credit rating. My wifes credit rating is not bad. Both me and my wife have credit rating that is above average regional and nationwide. But it so happens that her is a bit less than mine. Go figure that one out...

shortcrust

Took me a while to recognise it, but this is just another variation of the perennial ‘don’t they know who I am?!’ thread.

threedee

Not really.


What i wanted was "do you want TO KNOW who i am". big difference.


Just a bit of help. Then again, maybe i'm naive and too reliant on trust.


#EDIT# Just booked appointment with a personal finance advisor at my branch. Just for ***** and giggles. See how that goes.

phillw

threedee wrote: »

As for small business "business plans", i consider 99% of them absolute waste of time in real life terms, as NO ONE can predict future.

That doesn't make them a waste of time.

The business plan can tell you whether the person is delusional or not, they wouldn't be a good risk no matter how lucky you might think they will turn out to be.

If possible I'd get contracts signed before purchasing equipment, or rent it in the short term until the business model was proven. It's not always possible, but it would reduce your risk.