New Business Loan 2013

recession beater

Hi all,

Im looking for some advice.

Myself and my business partner are currently in the middle of setting up a fool proof business in a perfect location with great customer footfall, the business plan is underway and we are obviously planning on having everything to a tee on it.

My question is are the banks open to ideas and new business' in the current economic climate or are they just shrugging people off?
Are they giving out loans to people with genuinely good ideas and well thought out plans?

Thanks in advance.

Peterdalkey

In general banks today don't make lending decisions based on ideas, they look at the collateral offered ( discounted by about 70%) and the the capacity of the borrower to repay, along with the scale of the proposers cash input. It is very very difficult to get bank financing for a start up, unless you can prove you don't need it!

Sorry to be so negative but that appears to be the reality for most people... Unless you have some great connections in the bank.

recession beater

Hi Peter,

Thanks for the reply.

I figured id hear that and thanks for your honesty.

We'll give it a try and possibly go down the road of getting an investor.

Thanks again.

miju

My local business manager in BOI only said to me today that he's certain we'll get funds. Jesus I had a good chuckle so I did :P

OP I'd say apply to the banks, get your rejection letter and then visit http://www.microfinanceireland.ie/ and apply for one of their loans

sandin

I'd disagree with peterdalkey, both aib & ulster bank are open to loans.

For up to 50k and up to 130k (aib if you have 3 years history with them) they are happy enough with a good credit record and a personal guarantee and will want to see investment from you too.

For over 50k on a new business you will need security. Rates are very low at present via EIB funding (5.49%)

I would start with the bank with whom you bank with on a personal basis. Another option if you don't need a large amount is to take out a "car loan" - sort of cheating, but who cares?

sozbox

sandin wrote: »

I'd disagree with peterdalkey, both aib & ulster bank are open to loans.

For up to 50k and up to 130k (aib if you have 3 years history with them) they are happy enough with a good credit record and a personal guarantee and will want to see investment from you too.

For over 50k on a new business you will need security. Rates are very low at present via EIB funding (5.49%)

I would start with the bank with whom you bank with on a personal basis. Another option if you don't need a large amount is to take out a "car loan" - sort of cheating, but who cares?

Secured financing for a start-up this year and had a similar experience. No issue getting 75% of the start up costs financed by then bank with no collateral.

Ability to repay taken in account and personal guarantees were sought. We went in very well prepared and had the sign off after 2 meetings.

There is finance out there.

Bandara

Jason1984 wrote: »

Secured financing for a start-up this year and had a similar experience. No issue getting 75% of the start up costs financed by then bank with no collateral.

Ability to repay taken in account and personal guarantees were sought. We went in very well prepared and had the sign off after 2 meetings.

There is finance out there.

Also started a new venture this year and found Ulster Bank very good to deal with

Met with both BOI and UB and each offered the finance required but BOI conditions were absurd, off the wall stuff

I recommend UB, but deal with a proper branch not a small one, I used College Green in Dublin.

Good luck

Peterdalkey

I was not attempting to be overly negative, but a personal guarantee on a business loan effectively makes it a personal loan, with all the liabilities down the line attached. The banks will demand a schedule to establish the value of your unencumbered personal assets. If the assets are insufficient in their view, they will seek a 3rd party guarantor. It is the bank's way of getting around the protection of limited liability, I do accept that sole traders and unlimited companies/partnerships do have effective personal guarantees on all borrowings anyway.
Banks will also look much more favourablely on people with an established track record in business and those with meaningful independent funding in place for the venture. Generally, but not exclusively, startups promoted by bright young people do not have such resources and will struggle to raise any bank financing.
The OP did not indicate that they had their own financial resources available, in fact only mentioned raising bank loans as source of finance.

Bandara

recession beater wrote: »

Hi all,

Im looking for some advice.

Myself and my business partner are currently in the middle of setting up a fool proof business in a perfect location with great customer footfall, the business plan is underway and we are obviously planning on having everything to a tee on it.

My question is are the banks open to ideas and new business' in the current economic climate or are they just shrugging people off?
Are they giving out loans to people with genuinely good ideas and well thought out plans?

Thanks in advance.

As an aside, I opened a business that, like yours, was completely 100% foolproof, in a location that all the big players in the business were fighting for 3-4 years to get.

Footfall is in the top 5% in the country for the type of business. I've 12 years very successful direct experience in this industry and pretty much am perfect to make it a success.

Except, it's losing its shirt, the business to date has been pathetic with zero signs of an increase, it's not doing close to even 40% of the expected business predicted. It's losing approx 3,000 a week, with me working 90 hours and obviously drawing with no salary.

I have done everything required and implemented far more than most people would have the knowledge and ability to do.

Sometimes you just open a dog. That's the way it goes.

Peterdalkey

Hammertime wrote: »

As an aside, I opened a business that, like yours, was completely 100% foolproof, in a location that all the big players in the business were fighting for 3-4 years to get.

Footfall is in the top 5% in the country for the type of business. I've 12 years very successful direct experience in this industry and pretty much am perfect to make it a success.

Except, it's losing its shirt, the business to date has been pathetic with zero signs of an increase, it's not doing close to even 40% of the expected business predicted. It's losing approx 3,000 a week, with me working 90 hours and obviously drawing with no salary.

I have done everything required and implemented far more than most people would have the knowledge and ability to do.

Sometimes you just open a dog. That's the way it goes.

What a wonderful, brutally honest post, which illustrates the sad state of our economy and the particularly high risk with retail today. I can only imagine the personal toll such a situation is taking on you and yours.

Without saying it, you have confirmed that there is no such thing as a foolproof business, despite having all the ideal components in place. It is clear that to succeed one also needs the market, timing and a bit of luck to be in your favour, things that are mostly outside your own control.


On a wider note, one never plans to fail, but it is prudent to evaluate where you will be if your venture fails. You need to know that to balance and assess the risk on the downside and work to minimise the personal consequences if doomsday comes to pass. When all is lost, the only thing you can be sure of is the Personal Guarantee will still be there... they are nasty insidious instruments that should be illegal, in my opinion.

Hammertime

Hammertime wrote: »

As an aside, I opened a business that, like yours, was completely 100% foolproof, in a location that all the big players in the business were fighting for 3-4 years to get.

Footfall is in the top 5% in the country for the type of business. I've 12 years very successful direct experience in this industry and pretty much am perfect to make it a success.

Except, it's losing its shirt, the business to date has been pathetic with zero signs of an increase, it's not doing close to even 40% of the expected business predicted. It's losing approx 3,000 a week, with me working 90 hours and obviously drawing with no salary.

I have done everything required and implemented far more than most people would have the knowledge and ability to do.

Sometimes you just open a dog. That's the way it goes.

Sounds tough. I have been there. Might be time to shut the whole thing down and cut your losses? There will always be another plan around the corner for someone like yourself

Lobby Con Shine

Deleted User wrote: »

Sounds tough. I have been there. Might be time to shut the whole thing down and cut your losses? There will always be another plan around the corner for someone like yourself

It may not be that simple.

As Peter said above, it is a certainty that banks will require personal guarantees from sole traders or the directors of a company. The liability for the loan follows you like a bad smell long after the business has shut.

There is an erroneuous presumption in the media (particularly Marian Finuncane whom I've heard mention this a few times) that Irish people are afraid or embarrassed to fail at business in comparison to, say, Americans who view previous failures as a badge of honour.

I run a business and it's certainly not embarrassment that I fear, it's debt and lots of it. Think about it. In order to run a business, you have to invest your money, you take out loans and you sign a lease. God damn it you sign a lease. People are afraid to fail because it's bloody costly. I couldn't give a hoot what anyone would think if my business failed but I would lie awake at night if had contractual obligations under a lease and where I couldn't get anyone else to take it over on the same rent.

In my view, that's why people are afraid of failure.

Anyway, off topic I know but rants usually are.

Well thats not what I was getting at really. I'm still paying off a loan which I gave a personal guarantee for years back, the one good move I made on that business was shutting it down as soon as I realised it wasn't panning out the way I had envisaged, and that the sooner I closed it down the less money I would lose in the long run. Failure didn't come into the equation for me, it wasn't an emotional decision, purely financial. I gave it a good crack but it just didn't work.
In the case where your losing thousands a week, it may be best to cut your losses. Of course the other option is to fight and to hope your skills and work ethic can turn the thing around, but its good to look at these things black and white in terms of finance.

The liability of a loan can follow you around indeed, I was fortunate enough that my other enterprises could absorb that monthly expense, but that might not have been the case if I had pushed on harder with that particular business.

Either way Hammer has the sense to figure out what his best direction to go is I'm sure.

Bandara

Deleted User wrote: »

Sounds tough. I have been there. Might be time to shut the whole thing down and cut your losses? There will always be another plan around the corner for someone like yourself

Hi rifle

I have a firm line in the sand drawn in my head and if we get to that point then I walk away.

I still believe in the business and am quite certain that it will be a success but not within the timeframe that I require in order to avoidless being reckless with years of equity built up elsewhere.

I'm still fighting though, don't draw up the obituary yet

sozbox

Hammertime wrote: »

Hi rifle

I have a firm line in the sand drawn in my head and if we get to that point then I walk away.

I still believe in the business and am quite certain that it will be a success but not within the timeframe that I require in order to avoidless being reckless with years of equity built up elsewhere.

I'm still fighting though, don't draw up the obituary yet

Fair play for persevering!
Do you mind me asking which retail sector you are in?

Louise McCarthy

recession beater wrote: »

Hi all,

Im looking for some advice.

Myself and my business partner are currently in the middle of setting up a fool proof business in a perfect location with great customer footfall, the business plan is underway and we are obviously planning on having everything to a tee on it.

My question is are the banks open to ideas and new business' in the current economic climate or are they just shrugging people off?
Are they giving out loans to people with genuinely good ideas and well thought out plans?

Thanks in advance.

If its short term business loan you are looking for try www.moneybush.net my brother came across them and they delivered when he needed it.

alpha80

maybe here you can get support:
Dublin Business Innovation Centre

ImDave

I must say, I have opened a new business account (limited company) with BoI in the two weeks. I applied for a business credit card not thinking I would be approved for it, but was told in branch yesterday that it had been approved. In the midst of all the doom and gloom I was under the impression that getting any credit from the banks was next to impossible.

Bits_n_Bobs

My own experience (approx 24 months ago, as a long term customer with a perfect credit record) is that the banks will seek personal guarantees for a new business loan to a PLC. To my mind this is a personal loan and should be classed as such.

For leasing IT related goods they were also seeking a 'lean' on an account with the equivalent amount of the leased goods i.e. lease value 10k - cash in bank account that bank has a lean on is 10k.

They got a big **** off from me on both the above. No doubt I am someone who they regard as having 'offered credit to' and thus I contributed to them reaching whatever idiot targets the idiot politicians idiotically imposed on them.

lomb

There is no sure thing in business and success is the poorest of teachers. Only with failure do you learn. Witness the boom and people buying more and more property as they were successful at it. They hadnt a clue what they were doing.
If I was to do now it I would learn how to manage people before employing anyone otherwise a disaster awaits, give what people want not what you do, never buy property(as this is should be bought from old money not new), sign a lease under a ltd company paying a fair rent so if it doesnt work you can transfer the lease and wont be liable if not, have good break clauses paying the landlord if need be, never get ripped off by franchises unless sure things that make money every time and the demand is there ie Mc Donalds. You could easily loose 200k in fitouts on a dog
Treat people fairly .
You also need the market which in many cases in Ireland just isnt there. The Irish have big dreams and expectations but this country is smaller than Birmingham and the economy just isnt there to fulfill most peoples even if they work hard.

alpha80

Another advice:
Seed and Venture Capital
or
NDRC

When your idea is really good and profitable it would be easy to find an investor. I would do it on this way rather than loan and a free review of your idea is incl.

miju

Would tend to agree we just started in Hothouse Phase 1 and its good for initial validation and development of your idea