new buisness venture

Ladyinthedark

hi ,could anyone give me information on getting a start up loan for a new business idea .I don't know where to turn as I have no savings .does anyone know about the credit unions in terms of business loans .please any help or information would be great I'm trying to get off the social welfare and create a better life but its nearly impossible ,ive found help from the local enterprise office but they can only do so much .also if anyone had information on getting a business plan ,theres people looking for 4/500 euro I cant afford that

sysprogrammer

Is it 5, 10 or 500 thousand you are after ? this will vary the options available to you.

Can you give a little more detail on the type of operation you wish to start ?

we can help better then

ironclaw

I'd echo what sysprogrammer said but I'd add, before you seek or spend a penny, get your idea validated by someone who can do so expertly and in an unbiased fashion. Thats not friends or family, its individuals who have zero interest in protecting your feelings or emotions. People who work in the industry day to day, not loan officials or even the enterprise board. It sounds harsh but a lot of people are told to follow their dreams, when a 10 min chat with someone in the industry could have saved them thousands.

Something I learned the hard way over the years was to just talk about your ideas. Most people are far too busy or concerned with their own affairs to even remotely think about 'stealing it'. More often than not, they wished me well and said to check in if I needed anything in terms of help.

With respect to your last point about a business plan, you can write that yourself very easily. You don't need to pay someone as you should be aware and acutely focused on every element of it. Download a few copies for bedtime reading and following the same framework for your own idea e.g. There's no point paying someone to research your SWOT analysis if you don't understand the market and background to it yourself.

Ladyinthedark

sysprogrammer wrote: »

Is it 5, 10 or 500 thousand you are after ? this will vary the options available to you.

Can you give a little more detail on the type of operation you wish to start ?

we can help better then

thanks,its an online subscription service .I would need about 50 thousand

Lincoln98

Hey. You could contact your LEO office. They would be able to give you advice about this, & inform you of any funding available

duploelabs

The Leo grants are usually matched payments which you have to spend first so unless you've the capital to start with you're stuck. For example for a 50k grant, you'd need to spend the 50k and they'd reimburse you for (sometimes) half of the cap ex when you produce the receipt

ironclaw

Ladyinthedark wrote: »

thanks,its an online subscription service .I would need about 50 thousand

Can I ask how you arrived at that figure?

I work exclusively online and depending on what this is, you could spend that in advertising alone. There are also huge considerations depending on what it is and the content. HD Video? You'll need serious infrastructure which again, could cost 1000's per month depending on what you are doing.

Is it a product or service? An online course? You can try any of these for very little and test your market with many platforms. If you give us an outline, we might be able to come up with a MVP for you to trial.

Ladyinthedark

Ladyinthedark wrote: »

thanks,its an online subscription service .I would need about 50 thousand

Being straight with you, you have zero and I mean zero chance of getting that kind of funding.
Even 10K is going to be extremely hard to get.

No one is going to give you money unless they are assured of your ability to pay it back. Your lack of savings can only be offset by purchase orders, or an asset that could be secured for the loan. Then you would have a chance.

You need to get initial support from friends and family, sell your idea to them first. Get your service up and running, bring in some sales, and then if you need more funding apply for loans and finance then.

View banks and lending orgs as people who want to make money off you. They are not going to do you any favors, its a common mistake many people starting off make - thinking they are there to help you. They are there to make a profit.

One other point - 50K is major cash to get the ball rolling for an online service, for someone in your position. You should be looking at more like a 10th of that at most to get yourself started. That is much more realistic.

Ladyinthedark

Ladyinthedark wrote: »

also if anyone had information on getting a business plan ,theres people looking for 4/500 euro I cant afford that

the plan should already be done before picking figures like 50k out of the air, you can get templates online for free and best to be doing it yourself as its your business, if you want to succeed you will need to start getting your own hands dirty and get familiar with planning, budgeting, basic accounts etc. Also an online subscription business shouldn't be costing anywhere near 50k to set up in my opinion..

tacofries

[Deleted User] wrote: »

Being straight with you, you have zero and I mean zero chance of getting that kind of funding.
Even 10K is going to be extremely hard to get.

I wouldn't say zero chance if the work is put in to creating a solid business plan that is based on a strong idea. I was offered 40k loans by two banks (both of which were interest only for the first 12 months) and after some gentle negotiation it was only necessary for me to give them a personal guarantee. They did ask my parents to also give one however after some gentle negotiation they dropped this idea. I was just out of college at the time so had no assets of my own. Even the product which the business was going to be built around was only halfway through the prototyping stage so I was somewhat surprised when we were told that the loan was approved.

What I would say is to think about what your life would be like if the business fails and you have to pay back the loan, in full, by yourself.

I was fortunate enough to go on and raise investment which meant that I never actually had to take out the loan. Thank god this is the case as we have had so many issues over the last while that I can only imagine the stress levels if I also had the fear of a 40k bank loan hanging over me.

However strongly you feel about your chances of success, the fact of the matter is that most likely your business will fail. If it doesn't fail you can still be sure that there will be a few moments where the business is on the rocks. A bank loan is not what you want in this scenario.

Perhaps look at applying for the following funds first in order to validate your idea before putting yourself under long-term financial strain:

LEADER grant
LEO feasibility grant
Irish Best Young Entrepreneur Competition
New Frontiers Programme
Enterprise Ireland Innovation Voucher
Enterprise Ireland Feasibility
Enterprise Ireland competitive start-up funding
Accelerator programmes, of which there are many different types, that are run across the country. 2 that come to mind are the NDRC and the Bank of Ireland Work bench.

davyboy1975

Your local social welfare office will help u. I am currently doing the same thing, ask about the back to enterprise allowance and speak to a jobs facilitator. They will put you I n touch with the local area partnership who will give you a business plan template and fill it out with you for free.
This is probably your best bet at the moment as they will give you all the advice you need

tacofries

tacofries wrote: »

I wouldn't say zero chance if the work is put in to creating a solid business plan that is based on a strong idea. I was offered 40k loans by two banks (both of which were interest only for the first 12 months) and after some gentle negotiation it was only necessary for me to give them a personal guarantee. They did ask my parents to also give one however after some gentle negotiation they dropped this idea. I was just out of college at the time so had no assets of my own. Even the product which the business was going to be built around was only halfway through the prototyping stage so I was somewhat surprised when we were told that the loan was approved.

.

Your saying you got offered 40K from a bank off a business plan with no sales, no company assets to back it up, you were just out of college? Did you get that in writing from an underwriter or just the SME guy in the bank saying its possible?
If that happened then these must have been some magical banks from another planet!

What else did you have in the equation there that made them think you'd be able to pay this loan back if your business failed?

EDIT - one other thing, fortunate to raise investment instead of taking a bank loan, you've got that backwards my friend. It is much better to raise debt then giving away pieces of your company.

ironclaw

Deleted User wrote: »

Your saying you got offered 40K from a bank off a business plan with no sales, no company assets to back it up, you were just out of college? Did you get that in writing from an underwriter or just the SME guy in the bank saying its possible?
If that happened then these must have been some magical banks from another planet! .

I see this another way but in a similar light. A bank really doesn't care if your business succeeds or fails. They have their guarantees and collateral, so they're secure. As such, they are a terrible indicator of how viable your business is because they'll literally throw money at you. Being honest, sounds like they were half taking advantage of you Taco Fries given your age and experience. The same can be said for a lot of local enterprise boards and grants, its something for the newspapers to print. A quick google through a lot of incumbator ideas and media over the years will show a slew of now burnt out or non-existent companies.

I'd a huge advocate of lean and doing it yourself. No enterprise in the digital realm costs 50k to get off the ground. With the right team or learning, you can create a PoC for half nothing and get some feedback. If it starts to sell, great, you have cash flow. If you see a roadblock coming up, there are plenty of individuals who will back you provided you can prove your sales pipeline, which should be easy because you have a fully functional product. I can't stress enough how its infinitely more valuable to get half the money from someone with actual experience than the full amount from a bank or similar.

Reverse your viewpoint and ask yourself how your product or service will make 50k, and do that, instead of looking for 50k to make your product. It's a great acid test anyway because if you can't do it that way, it's probably not going to work anyway.

tacofries

[Deleted User] wrote: »

Your saying you got offered 40K from a bank off a business plan with no sales, no company assets to back it up, you were just out of college? Did you get that in writing from an underwriter or just the SME guy in the bank saying its possible?
If that happened then these must have been some magical banks from another planet!

What else did you have in the equation there that made them think you'd be able to pay this loan back if your business failed?

EDIT - one other thing, fortunate to raise investment instead of taking a bank loan, you've got that backwards my friend. It is much better to raise debt then giving away pieces of your company.

With both AIB and BOI I received the final papers from the underwriter to sign. I think interest was 4.5% also so was tempting. Extremely happy that I didnt go ahead with it though.

BOI said to me that the underwriter threw a lot of questions at me and that I had an answer that actually made sense for everything. He also said that I would be shocked if I knew how many people didn't know the answers to even basic parts of their business especially the financials.

The AIB business manager told me that the underwriter liked the product and thought the business plan was well thought out and well backed up with relevant materials.

And yes, no sales, no assets (unless you want to count a car that had a credit union loan on it!), and was about 8 months out of college. I also had nothing else which I could have used to pay them back if the business had failed (especially since their money was going on a mold which had no resale value) except perhaps the fact that I was young with a solid enough degree behind me. A lot of people just don't know how to answer the questions that they are being asked, provide evidence to support the answers that they give and be proactive in recognising and addressing points which will look unfavourable to the person doing the correcting.

Regarding your EDIT; disagree for my case although it does depend on a number of factors. Get investment from the right person and it will do wonders for your business. On the contrary get it from the wrong person and it will be a disaster. I got an absolutely brilliant valuation for my company with people that were able to open doors and provide a lot more capital if needed. I would have being totally nuts not to take it.

tacofries

tacofries wrote: »

With both AIB and BOI I received the final papers from the underwriter to sign. I think interest was 4.5% also so was tempting. Extremely happy that I didnt go ahead with it though.

BOI said to me that the underwriter threw a lot of questions at me and that I had an answer that actually made sense for everything. He also said that I would be shocked if I knew how many people didn't know the answers to even basic parts of their business especially the financials.

The AIB business manager told me that the underwriter liked the product and thought the business plan was well thought out and well backed up with relevant materials.

And yes, no sales, no assets (unless you want to count a car that had a credit union loan on it!), and was about 8 months out of college. I also had nothing else which I could have used to pay them back if the business had failed (especially since their money was going on a mold which had no resale value) except perhaps the fact that I was young with a solid enough degree behind me. A lot of people just don't know how to answer the questions that they are being asked, provide evidence to support the answers that they give and be proactive in recognising and addressing points which will look unfavourable to the person doing the correcting.

.

Maybe you are a miracle worker, and a sales guru Taco and you have some special relationship with these banks.

Otherwise if your able to get more then 2% off their regular loan interest rates and get loans for 40K with no sales, assets, income, experience or a ready product then you are operating in a different realm to the rest of us!

tacofries

[Deleted User] wrote: »

Maybe you are a miracle worker, and a sales guru Taco and you have some special relationship with these banks.

Otherwise if your able to get more then 2% off their regular loan interest rates and get loans for 40K with no sales, assets, income, experience or a ready product then you are operating in a different realm to the rest of us!

El Rifle, I am flattered by your extreme scepticism especially since I have done what you claim to be so impossible. Also quite funny how you think that you must have special connections, I'd love to hear the stories of what has actually made you this way?

Receiving a 2% interest rate discount is just a matter of doing your homework. It's as simple as that.

pedroeibar1

There are two issues in this topic.

The first is the Taco loan experience. All I will say is the last time I raised money personally I was a mature adult, well known professionally, I had a clean track record, a large income stream, substantial assets & high net worth. Despite all that and a long and good relationship with the bank the sum advanced was secured by a charge on an asset and covered a multiple of times. I did obtain a decent rate.

The second issue is the growth in the number of people posting here who expect to be fully funded for whatever project has taken their fancy, be it a coffee shop, a clothes business, a website, etcetera. Where do they get the sense of entitlement, the belief that they are so important or because they are out of work they should be given money to re-join the workforce? Why should the State (i.e. us) shovel money out to (usually) half-baked schemes? Where is the incentive for the promoter to make it work if s/he has no investment in the project? If those posters are so stupid as to think that they can get capital with no cash input from themselves, they are incapable of business survival.

The simple fact of the matter is anybody who has nothing will never obtain a business start-up loan from a financial institution. Even if they have a great idea and a lender views it positively, they would need to have spent a considerable sum on development and have proof of an income stream before a bank would advance a loan. Also, in my experience the higher-risk lenders who operate in the start-up area will invariably do so by way of preference shares and not a straight loan.

The answer is simple - no point in going to the LEO/whoever, you need to have some cash yourself so go off and earn it. Your relatives are stupid if they give you a sum that matters to them. You also risk losing their friendship when your great idea fails.

tacofries

tacofries wrote: »

El Rifle, I am flattered by your extreme scepticism especially since I have done what you claim to be so impossible. Also quite funny how you think that you must have special connections, I'd love to hear the stories of what has actually made you this way?

Receiving a 2% interest rate discount is just a matter of doing your homework. It's as simple as that.

Reality is what has made me so skeptical. I've been through the process of getting business loans on a of numbers occasions, approved and rejected. I just fought extremely hard to get one approved, for 85K, with over 200K of sales behind it, patents filed and an investment of 142K already put in.

Never has there even been the suggestion that I could get money from a bank based on the criteria you have suggested which is essentially the bank gifting you money.

Pedro has highlighted the realities well in his post.

tacofries

I don't know what you found so hard but not the case for me at all. I take it in your business plan you did a stress test on all the financials to cover an increase in interest rates, a downturn in sales and poor currency rates to key markets? Also hope it was an SBCI based loan that you were approved for so that you received the 2% interest rate discount?