New Business loan

bayles

Im in the process of putting a business plan together for a new business . Before i get to the financials on the plan does anybody know if the banks are even lending to new business start ups or would i want to be thinking about a different route . I would be talking in the region of 40k to get it fully up and running .

Kinetic^

A solid business plan will show your commitment. Get a professional to help you out with it.

infamous

Banks are not open for business, despite their claims. Angel investor is your best option.

bayles

Thanks Infamous but i was thinking more along the lines of the Enterprise Board , im not really interested in outside investors.

ssbob

Hi Bayles,

Have you invested in the business yourself? Banks will want to see commitment, other options include Enterprise Ireland, Credit Union.

I would advise a decent business plan(help of a professional if possible) and a confident pitch to whoever might be the lender/investor.

Can I ask what is the line of business?

bayles

Hi ssbob

My wifes family have a business that is trading very successfully even through the recession and one of their biggest suppliers is about to go out of business its only a matter of time . We know because they owe us a lot of money and also other business , i cant go into to much detail but yes you are reading that right , they owe all the companies money.
This company were trading with a massive turnover untill a few bad decisions were made on there behalf , stupid decisions in reality. They diversafied into areas that they knew little about and that is what started taking them down . We want to step and take over the massive gap in the market that they will leave given that they were (in there height) turning over close to 1 million euro a year .

ssbob

bayles wrote: »

Hi ssbob

My wifes family have a business that is trading very successfully even through the recession and one of their biggest suppliers is about to go out of business its only a matter of time . We know because they owe us a lot of money and also other business , i cant go into to much detail but yes you are reading that right , they owe all the companies money.
This company were trading with a massive turnover untill a few bad decisions were made on there behalf , stupid decisions in reality. They diversafied into areas that they knew little about and that is what started taking them down . We want to step and take over the massive gap in the market that they will leave given that they were (in there height) turning over close to 1 million euro a year .

If they are a supplier wouldn't you owe the money and not them?

Anyway aside from that, I have two points to make:

1. Recovering the money from your creditor, even though they are in difficulty, your best bet to recover part or all of your debt before a liquidator/receiver steps in and you only get one in seven is to speak to the company and try and get them to work out a payment plan with you whereby they give you €X every Friday for the foreseeable future, even if you don't get all your money at least a lot will have been recovered, if they can't agree to this, then stop supplying them and issue proceedings against them.
2. Have you considered just buying this failing company? May be the easier option rather than having the start up costs associated with opening a new arm to the business?

Bob

TheCostumeShop.ie: Ronan

Banks are technically open for business but in reality they aren't lending... the chance of you getting a loan to buy a dying business unless you have funds in the bank to lock in against the loan.

There is another option though, approach the business with an offer to assume the debt as payment for the business. You then buy the business for a euro (consideration) and negotiate with the debtors that you need some time to turn the business around and show them the plan to do so. You may need to offer them some benefit for their tolerance or you can be a hard ass and explain there is two options 1. liquidation and they get nothing or 2. they bare with you and you'll promise to be a loyal customer for years to come.

bayles

Like i said they owe all the companies money , im not going to get into the industry or the mechanics of it .
Im not interested in taking over there existing business although we have talked about it . It would be easier to start fresh as we have all their contacts through comunications regarding outstanding debt and an excellent reputation , nobody would touch this company or have any dealings with them after the mahem they have left with other companies and the general public . They are a well known company and when they dissapear it will be noticed .

TheCostumeShop.ie: Ronan

Ok thats fair enough but the banks wont bank roll a new venture with out security. By that I mean, Unless you can guarantee that if the business fails, the whole economy stops moving and you die; that they will still get paid back in full (or if you die they get an extra bonus) they will simply take your application, sit on it so you don't move to another bank and do absolutely nothing.

Start looking at vendor finance.

Ps. I know bankers will argue their case and someone will mention you can report them for not lending to some ombudsman, but the fact is they aren't lending to small business on the ground level. Even really profitable businesses aren't being supported.

ssbob

I think you are an ideal situation to look for an Enterprise Ireland grant, you will have to employ people and it looks as if you have a viable business plan in place because you know there is money to be made. As long as you can pitch this then there should be no problem as regards getting a grant or getting pointed in the right direction.

As regards the banks, best thing you can do is enquire, the worst they can say is no!

MyPerfectCousin

I recently received a bank loan of a similar size. Perhaps I was approved because:

I said I would invest 25% of total start-up costs
I had to show I had that money and lodge it first
It was a bank I had a business account in for a few years already

I also had a solid business plan. (I do business plans as part of my other business, so I knew what was needed.)

If you get no luck from your own bank, I suggest Ulster Bank. I had no accounts with them but they gave me pre-approval if I would invest 33% of the total. Ulster Bank also isn't in quite the same level of distress as AIB, BOI, etc. NIB may be an option too.

yosemite_sam

If you have the cash yourself, they will borrow you your money for the project and charge you interest, that is my experience with banks

Admor Tony

In my experience, the banks are lending - all of them. They are particularly keen on taking on trading businesss and will lend to 'viable' businesses although proving you have a viable business or you are starting up a viable business does require some effort from you alone or with the help of an Advisor with experience of what the Banks are looking for. Try clearly defining the word 'viable' and you will see what I mean.

As others have said, the key is a good quality (not quantity) Business Plan, written from the Bank's perspective i.e. dealing with the risks and how you can overcome them to ensure the Bank has a strong chance of getting their money back. Equity in up front, existing relevant track record and strong, relatively secure trading cashflow are all helpful in proving the business is 'viable'.

Your difficulty may be proving that a failing business will be a success with you running it but that is certainly possible if approached correctly.

You can start with your Enterprise Board at least for their signposting capabilities and definitely try the Banks - as others have said, they can only say no.

Tony

TheCostumeShop.ie: Ronan

Tony and MPC, Did you guys personally guarantee these loans against hard assets or are these actually Irish banks taking risks in exchange for interest?

Admor Tony

TheCostumeShop.ie: Ronan wrote: »

Tony and MPC, Did you guys personally guarantee these loans against hard assets or are these actually Irish banks taking risks in exchange for interest?

The latter.

MyPerfectCousin

TheCostumeShop.ie: Ronan wrote: »

Tony and MPC, Did you guys personally guarantee these loans against hard assets or are these actually Irish banks taking risks in exchange for interest?

Well, there was no collateral or security if that's what you mean. But I probably wouldn't have been approved if I didn't already have an income from my first business which will continue. So even if the new business fails, they're gambling that I'll still be able to pay back the loan because of this other income.

TheCostumeShop.ie: Ronan

Great to hear lads! The gov enforcement must be working afterall.

Yep the banks will give money if

A. You have invested in it yourself
B. Your plan is watertight
C. Your pitch is very good and convincing. You have to SELL the idea to the bank, just like your customers
D. You put a 'personal' guarantee on the loan. Doesnt have to be assets, but could be that you have a good record and money in the bank already.

My tip is always ask for double of what you want. I did that the last time I applied for the loan, and they gave me half of what I asked for. On the way out of the room, I told the bank manager I asked for double because I knew they wouldnt give me the whole lot. He didnt like that but it felt good to get one over on them

bayles

Thanks for all the info guys ..

EIREHotspur

Deleted User wrote: »

My tip is always ask for double of what you want. I did that the last time I applied for the loan, and they gave me half of what I asked for. On the way out of the room, I told the bank manager I asked for double because I knew they wouldnt give me the whole lot. He didnt like that but it felt good to get one over on them

And so if you go to EL Rifles Bank Manager for the loan you better ask for quadruple because he will be looking out for the old "ask for double" ploy.

What about Credit Unions?

In this climate I am sure Credit Unions are giving out Business loans to people who say it is for "Household Renovations".

I suppose people who want to show a paper trial will ask for loans for computers, etc to show for expenses.

William72

Hi All - wanted to give this thread a bump to see what the situation is like now - have things improved at all - are the banks any more likely to lend now?

Also what about the enterprise boards - are they giving grants in peoples experiences?

Thanks

bobbymoore1

William72 wrote: »

Hi All - wanted to give this thread a bump to see what the situation is like now - have things improved at all - are the banks any more likely to lend now?

Also what about the enterprise boards - are they giving grants in peoples experiences?

Thanks

I can safely say it doesn't appear to have changed. I met 1 bank in particular and whilst they were friendly, they agreed I had identified a niche in the market, they simply said after 2 weeks that they believe the risk is outside the scope of what they are willing to take. I even got a letter to prove it.

Does anyone else have a different experience?

Thanks

smeharg

bobbymoore1 wrote: »

I can safely say it doesn't appear to have changed. I met 1 bank in particular and whilst they were friendly, they agreed I had identified a niche in the market, they simply said after 2 weeks that they believe the risk is outside the scope of what they are willing to take. I even got a letter to prove it.

Does anyone else have a different experience?

Thanks

Thanks for sharing your experience.

Did the bank give you any details of how the risk was outside the scope of what they were willing to take? For example, loan to equity ratio too high, insufficient repayment capacity, a sector they think is too high risk.

The banks claim to be lending, but as you have experienced, only if all the parameters are right.

bobbymoore1

smeharg wrote: »

Thanks for sharing your experience.

Did the bank give you any details of how the risk was outside the scope of what they were willing to take? For example, loan to equity ratio too high, insufficient repayment capacity, a sector they think is too high risk.

The banks claim to be lending, but as you have experienced, only if all the parameters are right.

Yes they believe that despite identifying a niche in the market, the sector is too risky due to other established rivals.

I think they are just advertising to keep the FR and CPC people happy.

Thanks