Raising Finance Issue

rayman18

Hi,

I am hoping someone will be able to give me some advice and it would be much appreciated.

I have been in business just over 3 years and I have the opportunity to buy the property my takeaway food business is in, at a really good price. It would be purchasing the freehold off the landlord.

I am having trouble and to be honest and somewhat confused over a few things.

My plan is to buy the freehold - spend 50.000 to build a new stairs, and make the place fire cert ready to lease out as two apartments. I did my costings, that amount of money is enough for my plan.

1) The bank told me I would have to get a mortgage and a business loan as I have the plan to rent out apartments upstairs. The mortgage they want a 30 percent deposit and no deposit for the business loan. The loan of 100.000 would have to be paid back within 8 years and also I have to show I have 40.000 net profit. Which I don't.

2) I spoke to a mortgage broker - he told me the mortgage price for the property is too little and the bank won't even consider it. This really confuses me.

3) I am doing okay. All my costs are covered, my taxes are up to date and I have always over 1.000 in my bank account every month after my business direct debits and everything to do with the business are paid. I have a couple thousand in savings too.

4) With the landlord paid, I'd have 500 gone from my direct debits and ideally I'd like to replace the dead money of rent with repayments to a loan to do my plan.

Can anyone guide me here on ways to go about getting a loan or advice on how to raise the 100.000 euros?

Graniteville

The reason many places don't own their premises is that the market changes. the right location today may be the wrong location tomorrow.

30% deposit is standard for commercial loan.

Broker probably only deals with certain banks and some have a minimum of 250k for commercial loans.

Assuming you have and accountant, ask him/her to advise on figures and do up a plan and then present it to the bank. Look fr a 10 year secured loan. AIB are one of the better ones for a secured loan. (expect 5.5% interest rate)

rayman18

Graniteville wrote: »

The reason many places don't own their premises is that the market changes. the right location today may be the wrong location tomorrow.

30% deposit is standard for commercial loan.

Broker probably only deals with certain banks and some have a minimum of 250k for commercial loans.

Assuming you have and accountant, ask him/her to advise on figures and do up a plan and then present it to the bank. Look fr a 10 year secured loan. AIB are one of the better ones for a secured loan. (expect 5.5% interest rate)

Hi, thank you for getting back to me.

Okay, that makes sense. ie, 250k commercial loan.

I do have an accountant. They are in the middle of preparing my books etc.. so they will get me my tax clearance cert.

A secured loan means you're borrowing your own money though, doesn't it? I won't have the cost of the property in that.

I think I am talking to too many people about this, everyone is saying different things.

I'll get there!

Graniteville

A secured loan is one secured by an asset.

The asset would be the property you are buying.

rayman18

Graniteville wrote: »

A secured loan is one secured by an asset.

The asset would be the property you are buying.

Okay I understand now. I did not think that would work as it's not yet my asset! That might actually be a good option for me.

I am in my mid twenties and only have three years behind me. I'm not fully expecting things to work out for me but I'm trying my best! Age and years in business might not be a factor so I'll see how it goes.

You have been really helpful, thank you so much!