Business Loan?

REdinburgh61

To anyone out there,

If I tell you my story, my plight will, hopefully, make sense.

I am a 59 year old father of 3 girls, recently seperated from my wife. It was my choice to leave them in our house, (owned with mortgage), to safeguard the girls' futures. In the ensuing couple of years, my income and credit rating took a battering as rental property in Brighton is one of the most expensive in the country.

I am now on a more even keel, although getting help from UC, and I am looking for a pub, having been a publican, on and off, for forty years.

I applied to Lloyds, my business bank, for a £10k overdraft facility for 6 months to aid cashflow in those early months. They turned me down without even asking for my CV or financial forecasts for the pub.

Why do they call themselves business bankers, when they are not even intested in the business idea?

£10k overdraft for 6 months...the business would put a million through that account inside 4 years.

Help...who can I ask for help?

Thanks for listening.

Regards

(Removed by Forum Team)

[Deleted User]

You should apply for a business loan, rather than an OD, which is much risker for you, as it can be withdrawn at any time.

Your business case may not be strong enough, if you're only at looking at having put through a million by the end of four years. That may be why Lloyds refused you the loan. Make your case as strong as you can, but don't be tempted to pad the figures.

You might also want to remove your email address from your post, as it will be quickly passed round and you'll soon be receiving all sorts of exciting business offers.

REdinburgh61

Hi,

thank you for listening.

You know Lloyds didn't even look at the business plan! Just my credit rating...

Ho hum...onward to the soup kitchen!!!

Regards

Roy

Batesy1976

Hmm, I wonder what might make a lender a bit leery of lending money for a pub business right now....

Nope, I'm stumped.

Billy_B_North

How much profit has the pub made in the last twelve months? 

Caz3121

how much are you needing in total? how much are you putting in personally that you need the £10k to supplement? If can often be the case that you would be expected to fund 50% personally for example rather than expect a bank to carry 100% of the risk.

HobgoblinBT

I guess that you have failed their credit score. How much money are you proposing to invest into the business from your own resources? The bank would expect 50% as a minimum.

 Hospitality has for some time been a restricted appetite sector for banks.  Now with covid and lockdown, the hospitality sector has been hit hard, so from a bank’s perspective, it is an even more difficult sector than before.  Banks are going to experience rising bad debts over the next year or two due to the after effects of the covid lockdowns, including many hospitality businesses, so will probably only want to back what they perceive to be the best of the best startups.

In theory, a pub should not need an overdraft.  In simple terms, you buy beer at £1 a pint and sell it for £3 a pint and the £2 is used to run the pub, pay the staff, utilities etc, with the other £1 being used to buy next week’s beer.  It is a cash business so there should be no debtors so cash flow is self generated.

My suggestion would be to discuss with the pub company them taking you on as a manager, and looking to convert to a tenancy once you can demonstrate to the pub company and the bank that you have a good track record in your new location which the bank would then want to support.

Hope that helps.

BrassicWoman

have you added your email address in the hope a reader here will offer you the money? That's a pretty poor deed. If the bank won't, no one here should...

bris

REdinburgh61 said:

Hi,

thank you for listening.

You know Lloyds didn't even look at the business plan! Just my credit rating...

Ho hum...onward to the soup kitchen!!!

Regards

Roy

Thats old school, banks aren't interested in business plans anymore, they only want to know how much you have to invest and if you have a house to take to cover their investment when it all goes wrong and the pub game? Well it will go wrong so they run a mile from pubs now. 

20 years ago your local branch manager would look at a business plan and approve or decline it there and then, they had a limit, my managers was 100k and money cheap, flowing like a waterfall and given to anyone who had bit security.

People here will remember the big crash, thats what caused it, they lent so much it was like a pyramid scheme, so much bad debt caused it to come tumbling down.

Now it's all about what you have to lose, if you have nothing or very little then you're to high a risk.