Self-employed on a low income needs a loaned £3-4k buffer cash to be repaid within 2 years 16 December 2021 at 5:52PM in Loans 78 replies 2.8K views

warby68

If you mean its your comfort zone, then its quite usual to have to step outside your comfort zone when branching out in whatever way.

£5-6k is over 6m of your current income. For many to have that in reserve, especially on a low income, is just a dream. That's why your situation is a little unusual.

If you are more than usually anxious about what ifs and even if not you may want to make sure you have good insurance cover as the main risk I can see is you being unable to work for whatever reason.

Ajax67

warby68 said:

If you mean its your comfort zone, then its quite usual to have to step outside your comfort zone when branching out in whatever way.

£5-6k is over 6m of your current income. For many to have that in reserve, especially on a low income, is just a dream. That's why your situation is a little unusual.

If you are more than usually anxious about what ifs and even if not you may want to make sure you have good insurance cover as the main risk I can see is you being unable to work for whatever reason.

Anyway, you seem to be quite knowledgeable also about other risks.

Provided I get a "new" used van on some bad credit hire purchase agreement, do you know, what will happen to me, if, still during the hire purchase agreement, my finance provider goes bust, no one takes them over as a running concern, and the government refuse to step in?

Is it possible that, in such circumstances, I will lose the van, and no one will bother to compensate me for the lost equity, because it will be the employees of the bankrupt finance provider and the government, whose claims will need to be satisfied first, and I will end up only in the last group, along with all the business creditors of the bankrupt finance provider?

And do you know if I can insure myself against such sort of risk in England?

Thank you!

molerat

If the finance provider goes bust they will not be coming after the van, someone will take on the loan book. They will not want your van with all the aggro that will involve turning the assets into hard cash, they will want the money taking it in the same way month by month. 

As has been suggested earlier you need to speak to your business manager at your bank, that is their job.  To suggest that making up a business plan is a waste of time shows how naive you are being.  And no the MD of a large corporation will not go out working as a bouncer when he wants more money, he draws up a business plan and presents that to whoever he wants to get the money from be it a bank or shareholders.

Ajax67

molerat said:

If the finance provider goes bust they will not be coming after the van, someone will take on the loan book. They will not want your van with all the aggro that will involve turning the assets into hard cash, they will want the money taking it in the same way month by month. 

As has been suggested earlier you need to speak to your business manager at your bank, that is their job.  To suggest that making up a business plan is a waste of time shows how naive you are being.  And no the MD of a large corporation will not go out working as a bouncer when he wants more money, he draws up a business plan and presents that to whoever he wants to get the money from be it a bank or shareholders.

Thank you. I am only not sure if my business plan would potentially help me in my particular business situation, and particularly if it would help me to get the funding I want. The benefits of making a business plan would probably depend on some strict conditions, wouldn't they? Or do you think I would stand a chance to get a business loan if I took the pain to prepare some business plan according to any UK bank's requirements? And that the costs of making such exercise for a bank would really be justified?

Ebe_Scrooge

Ajax67 said:

molerat said:

If the finance provider goes bust they will not be coming after the van, someone will take on the loan book. They will not want your van with all the aggro that will involve turning the assets into hard cash, they will want the money taking it in the same way month by month. 

As has been suggested earlier you need to speak to your business manager at your bank, that is their job.  To suggest that making up a business plan is a waste of time shows how naive you are being.  And no the MD of a large corporation will not go out working as a bouncer when he wants more money, he draws up a business plan and presents that to whoever he wants to get the money from be it a bank or shareholders.

Thank you. I am only not sure if my business plan would potentially help me in my particular business situation, and particularly if it would help me to get the funding I want. The benefits of making a business plan would probably depend on some strict conditions, wouldn't they? Or do you think I would stand a chance to get a business loan if I took the pain to prepare some business plan according to any UK bank's requirements? And that the costs of making such exercise for a bank would really be justified?

You've been told on numerous occasions in this thread that a personal loan would be a foolish undertaking, given your situation - even if you were able to secure funding via that route.

A business loan could well be a more realistic option, but any bank is going to need to see a solid business plan before they consider advancing you a loan.

You seem to be reluctant to invest the time in preparing a business plan - and time is the only cost involved.  I hope you can understand how that would look to a potential lender?  "This person is asking me to lend them money to advance their business, and yet cannot be bothered to even put the effort in to create a realistic plan.  I'm out" (to use the Dragon's Den catchphrase).

Quite apart from anything else, I'm sceptical that new equipment would, in and of itself, increase your profit by 50% as you claim.  To grow any business, you need to put the hours in.  And when it comes to preparing the business plan, you won't be able to just say "I expect to increase my productivity by about 50 per cent".  You'll need to back that up with facts, evidence, and reasonable justification as to exactly how the new equipment will help you achieve that.  Will it allow you to service 50% more customers per month?  If so, do those extra customers exist - is the only reason they're not using your service at the moment because you don't have the time?  Can you realistically expect them to pay for your service in the future if you have this new equipment?  If it's not extra customers, exactly how will your productivity increase?  This is not me being nosy, this is what a lender will ask you.

I'm not in any way saying that a business loan is out of the question - but people are not going to hand out cash willy-nilly, you need to put some work in yourself.

Finally, just to clarify - none of the above is intended as a personal "dig".  Just trying to help explain how these things work.

impoverishedtraveller

Look at it this way:

1. No business plan = no chance of a loan.
2. Putting together a solid business plan = better chance of getting a loan than not having one.

Your choice whether to make life slightly easier for yourself.

No one knows if they’ll be accepted for a loan or not until you actually apply, so get on with it. Everything else in this thread is just bluster.

Ajax67

impoverishedtraveller said:

Look at it this way:

1. No business plan = no chance of a loan.
2. Putting together a solid business plan = better chance of getting a loan than not having one.

Your choice whether to make life slightly easier for yourself.

No one knows if they’ll be accepted for a loan or not until you actually apply, so get on with it. Everything else in this thread is just bluster.

Well, no one knows whether they will be accepted as an actor by some Hollywood studio until they actually apply either. But I bet it's quite reasonable to refrain from applying for such positions unless you have some indications you might be successful...
Instead of soliciting for some accountant to make a business plan for me or making it on my own, I might also - for instance - take on more window cleaning customers and service more properties...

Ebe_Scrooge

Ajax67 said:

impoverishedtraveller said:

Look at it this way:

1. No business plan = no chance of a loan.
2. Putting together a solid business plan = better chance of getting a loan than not having one.

Your choice whether to make life slightly easier for yourself.

No one knows if they’ll be accepted for a loan or not until you actually apply, so get on with it. Everything else in this thread is just bluster.

Well, no one knows whether they will be accepted as an actor by some Hollywood studio until they actually apply either. But I bet it's quite reasonable to refrain from applying for such positions unless you have some indications you might be successful...
Instead of soliciting for some accountant to make a business plan for me or making it on my own, I might also - for instance - take on more window cleaning customers and service more properties...

What a bizarre statement.

And you do not need an accountant to prepare a business plan, it's perfectly easy to put together yourself.  It just takes time.  To simplify it to the bare bones, you just need to give an overview of the current business finances (turnover, expenses, profit).  Then the trickier bit is justifying how the extra investment will increase profit, and by how much.  Obviously, you don't have a crystal ball - you can't say "I'll definitely attract 500 more customers per month".  But you do some market research, and if you think you'll attract 30 more customers per month, then why?  Or is it that your income will remain the same, but your expenses will decrease?  That one should be rather easier to quantify.

If I may say, you seem to be brushing aside most suggestions that people are trying to give.  The vast majority of responses on this thread have been factually accurate and helpful - quite possibly not what you were hoping to hear, but accurate nevertheless.

Ajax67

Ebe_Scrooge said:

Ajax67 said:

impoverishedtraveller said:

Look at it this way:

1. No business plan = no chance of a loan.
2. Putting together a solid business plan = better chance of getting a loan than not having one.

Your choice whether to make life slightly easier for yourself.

No one knows if they’ll be accepted for a loan or not until you actually apply, so get on with it. Everything else in this thread is just bluster.

Well, no one knows whether they will be accepted as an actor by some Hollywood studio until they actually apply either. But I bet it's quite reasonable to refrain from applying for such positions unless you have some indications you might be successful...
Instead of soliciting for some accountant to make a business plan for me or making it on my own, I might also - for instance - take on more window cleaning customers and service more properties...

What a bizarre statement.

And you do not need an accountant to prepare a business plan, it's perfectly easy to put together yourself.  It just takes time.  To simplify it to the bare bones, you just need to give an overview of the current business finances (turnover, expenses, profit).  Then the trickier bit is justifying how the extra investment will increase profit, and by how much.  Obviously, you don't have a crystal ball - you can't say "I'll definitely attract 500 more customers per month".  But you do some market research, and if you think you'll attract 30 more customers per month, then why?  Or is it that your income will remain the same, but your expenses will decrease?  That one should be rather easier to quantify.

If I may say, you seem to be brushing aside most suggestions that people are trying to give.  The vast majority of responses on this thread have been factually accurate and helpful - quite possibly not what you were hoping to hear, but accurate nevertheless.

And what about some data that would cast some light on the success rate of such applicants for a UK bank business loan who are as similar to me as possible in terms of trade, profit history or current balance sheet?

I am not a native English speaker, I don't have a particular presentation knowledge or experience, and in the UK I have worked in the field of finance for only a stint of about half-year so far.

To me, preparing a business plan would be a huge exercise that would take plenty of my time and energy, and, most likely, also some money for delegating various tasks (movement studies, explanation videos, photos, drawings etc).

Wouldn't it be reasonable to first get some information that would help me decide whether such exercise would be likely to be conducive to obtaining any business loan whatsoever?

Brie

Ajax67!  don't do yourself down!  You may not be an native English speaker but you write very well, grammatically and the rest and are capable of putting your point across quite forcefully.  There's a lot to be said for that.  And strangely enough some individuals might think you have a better chance of success not being a native!! (sorry to the Brits on the board but you know it can be true!)  

You don't need to have a whole song and dance act worked out.  You need numbers on a spreadsheet.  What are you making now and what does it cost you?  What would it cost to buy the van and the kit?  If you bought the van and kit how are you going to increase your customer base?  A sketched out flyer with costs on getting it properly done and the cost for distribution?  

But crucially - the initial spreadsheet with your numbers.  If you could put that together I'm sure some business types would be happy to review to give you helpful, constructive feedback on how to present that to a bank or other potential source of money.

Which leads me to the idea - is there any grants you can apply for?  You're not a native so is there a UK based society for your place of origin that might provide support.  When I first came to the UK (many decades back) I discovered that there was a number of organisations that wanted to assist me as I was from a Commonwealth country.  Now that I've been working here for a number of years there are groups I could go to based on association to my employment in the financial sector.   It might not just be banks and credit cards that could assist you.