Stuck between a rock and a hard place

[Simon.L]

I,m pulling my hair out, we are buying a property to kick off new business, lots of interest from clients, lots of interest from the banks. set up cost,deposits etc taken care of (around 600k) banks wont commit without contracts signed, clients wont commit, on paper, without buisness up and running, verbaly not a problem. even tried to get clients to sign a declaration to say that they would consider using the service once up and running but still no joy. What am i doing wrong?

Simon

[profitxchange]

Sorry to be a downer, but you seem to have invested a lot of money in abusiness that has no track record. Very Very few people will commit to such an enterprise. You really have gone about this back to front - you should have got all the commitments before investing anything.

Having said that, it may be worth getting an independent third party involved to try and break the deadlock. Talk the problem thru with your local business link - if they won't help directly they must know a number of local "experts" that could work with you.

The independent person may be able to get closer to what the issues really are with all the parties, and then help you work thru them. If you have invested £600k then a couple more to break the deadlock might be worth it.

Good luck.

[Simon.L]

The 600k is not yet invested it is arranged and available as soon as property is secured, i have a verbal, in principal, commitment from all interested parties, but the banks want to see signed contracts. To sum up without property, no signatures, without signatures, no property.

Simon

[profitxchange]

Why won't the bank give you the money? lack of personal security?

If it is a security issue then take a look at the DTI's Small firms Loan Guarantee Scheme where they will underwrite 75% of the security needed by Any bank.

[Simon.L]

i think it is probably the fact that the banks want to see that we have the business to generate the 40k per month needed to repay the money

[theMBA]

Simon,
I heard of a similar situation - described as "the credibility merry-go-round".
I also heard of an example where an entrepreneur obtained a (sizeable) cheque from a customer, which he showed to the bank, used to secure the bank's support, and then returned to the customer. I guess the visible sign of commitment (trust?) from the customer was enough to get what he wanted. Not sure this would be totally ethical, but, hey, "all's fair in love, war and business".

[Simon.L]

I,ve just called all my potential clients and told asked to borrow their check-books! Funny enough they said no, when they stopped laughing!!!!!

Oh well back to the drawing board(lol)

Simon

[theMBA]

Well done for trying.

In the example I quoted, the (potential) customer wrote a cheque, made out to the entrepreneur's business, which he didn't bank but returned after getting what he wanted from the bank.

I don't think anyone would give a blank cheque, let alone a chequebook.

The point was to think of creative ways of demonstrating that sufficient commitment is there from potential customers so that the bank needn't worry as much about 'formal' credibility/security etc. Bank managers sometimes have an element of judgement/discretion they can apply.

[Simon.L]

I was just joking about calling my clients, I understand the point you are making. but it is still difficult to get that level of commitment from clients who are not personal friends. The clients that i know personaly are more than happy to help but they are not of sufficiant calibre (financialy) to make much of a differance the bigger players are more reluctant even with the fact that they will save tens of thousands of pounds by coming on board.

[theMBA]

OK Simon - I didn't pick up the joke the first time (not always easy in this electronic medium).

Hope you achieve the commitment you need to get this deal to fly.

If not, I expect you'll have learned something from the experience.