Starting a business (personal loans)

GazzHam1966

Hello all.

I am looking to start a business and I wonder is it possible to take out personal loans to do this. Will lenders allow you to do this? What options do I have?

Thanks

TheSpectator

Virtually no lender will give a personal loan for a business. You need a business loan but if you haven't even started you will have very few options.

GazzHam1966

So in terms of raising funds then it is essentially impossible? The only reason I say is that I have checked with the Credit Club and it seems I would be approved for personal loans.

TheSpectator

A peraonal loan criteria and a business loan criteria are very different. Does the credit club ask the purpose of the loan?

GazzHam1966

Or if I had other monies saved and I wanted to use this for business purposes but then I used the monies borrowed to pay for day to day spending would this work?

TheSpectator

What banks lend for 'day to day spending'

MattMattMattUK

Do you have a proper business plan? How many months from starting until you make a profit? How many months to start to break even? How many months until you make enough profit to live on? How many months until you make enough profit to live on and repay the loan?

You either need a business that makes a profit from day one, you need to continue paid employment whilst you get things off the ground, or you need to save up enough to cover your living expenses whilst you start up the business and progress to making enough profit to live on.

MEM62

GazzHam1966 said:

Hello all.

I am looking to start a business and I wonder is it possible to take out personal loans to do this. Will lenders allow you to do this? What options do I have?

Thanks

If you want to start a business you have to fund it. (Unless you have a generous investor that will front the money)    In some cases you will get some funding from a bank but you will need a proper, solid, fully costed  business plan - not just a fantasy document - and you would usually need to put up half the startup costs.  The position of the banks is why should they risk their money on your venture if you are not willing to risk your own.      

DullGreyGuy

GazzHam1966 said:

I am looking to start a business and I wonder is it possible to take out personal loans to do this. Will lenders allow you to do this? What options do I have?

Look on the options you have to select from to say why you want a loan and make sure you answer it honestly, likely it will go into "other" and also check the small print as most loans will explicitly exclude some uses like buying a property. 

What will be the model for the business? Sole Trader or LTD?

GazzHam1966

Thank you and appreciate all of your comments some of them more helpful than others.