Advice on obtaining finance for business growth...

[AWLO]

Hi,

New to the forum, it seems a great place to share advice and tips on business! I was wondering if anyone could offer any advice on funding.

I have a new company, (launched 9 months ago) I'm currently running it from home, selling over the net. However, the company has a great potential to grow quite quickly. However, it needs the finance to really get this opportunity of the ground.

Current situaltion is: Sell through the company website and we have just launched a reseller program. We are currently getting our supplies form America but with the site beginning to get noticed and our reseller program launched, we are looking into importing direct from China to increase profitability.

The company needs finance for the stock initially however as I run this from home, we have to look into storage premises.

So we need a loan for:

Importing Stock
Warehouse
Marketing
Taking on Staff

However, my situation isn't too appealing to a lender. I live at home with parents. All the capital I had has already went into the business therefore I cannot offer any more money to meet with the lenders amount.

I was hoping to approach Scottish Enterprise or The Princes Trust first as I am within the age bracket to recieve their help.

Has anyone had any experience with this? Can you offer any advice?

I know I need to get together a sound business plan and accounts, is there anything else I should prepare?

*(accounts are definately not my strong point so if anyone could recommend an accountant who can help me set up the company accounts to present to lenders, it would be greatly appreciated)

Sorry, that turned out to be quite a long post. Hope you can offer advice.

Thanks

 

[Ozzy]

Firstly, any money you have already put into the business would be considered by a lender as your own investment. A bank for example would be willing to consider that investment when they look at the option of matching your current investment.

You do need a business plan as you already have realised, and if your business does have the potential to grow rapidly then pay a visit to BusinessLink and look at joining their High Growth program which does have some government money available to aid with the development of a business plan for example. They paid me 1.2k last week towards the development of mine and are paying some more towards a law diploma I am currently studying as part of staff training.

It is definitely worth talking to the like of BusinessLink and finding out what sort of finance is available to help expand your business, and there are also a few members on here who are also approved by the DTI to work with grants and raising finance, one that springs to mind immediately is Simon Read.

 

[daveashton]

Firstly, any money you have already put into the business would be considered by a lender as your own investment. A bank for example would be willing to consider that investment when they look at the option of matching your current investment.

You do need a business plan as you already have realised, and if your business does have the potential to grow rapidly then pay a visit to BusinessLink and look at joining their High Growth program which does have some government money available to aid with the development of a business plan for example. They paid me 1.2k last week towards the development of mine and are paying some more towards a law diploma I am currently studying as part of staff training.

It is definitely worth talking to the like of BusinessLink and finding out what sort of finance is available to help expand your business, and there are also a few members on here who are also approved by the DTI to work with grants and raising finance, one that springs to mind immediately is Simon Read.

First of all can you prove the sales model?
If so and I notice you are in Scotland go to
www.lincscot.co.uk

These guys are goverment funded and can help with goverment, VC and BA's

 

[acf]

I know a government sponsored scheme for the new SMEs which is called Small Firms Guarantee Loan (SFGL). There are a number of approved lenders in the UK under this scheme like HSBC, NatWest and Venture Finance etc. This scheme is for those who cannot obtain loan from high street banks due to lack of any security. There are certain other criteriae to be considered for qualifying for the loan. Try this one as well.

Good Luck!

 

[finstar]

The small firms scheme is OK, but has a £5,000 cap, which might not be enough for you.

For importing stock and the like, it would probably be quite difficult to get a business angel or venture capital fund to buy into your idea (and for the amounts of money they generally hand over, it would probably be too much!).

Depending on what it is that you sell, there may be other forms of finance available where you secure the finance on the stock itself, rather than any of your other assets (of which you have stated you have none), so it would probably be worth your while having a look down one of those avenues as well.

 

[Jose]

Hi AWLO,

Sounds like the business is picking up quite nicely.

You are absolutely correct in that you will need a business plan at some point to manage growth and ongoing operations.

However, to obtain finance, you may just need to do an executive summary, which highlights the main aspects and true potential of the business.

You are also correct in that the lender will require in most cases some kind of "Hurt" money i.e. what funds are you bringing to the party. However, this is not always true!

We have undertaken assignments (producing BP’s) in the past where the borrower does not have any funds and ends up with a letter of intent from the lender..

I wish you every success and send me a PM or reply here if you think I can be of assistance ( Click on the attached link for details of recent projects)

 

[Ian J]

The small firms scheme is OK, but has a £5,000 cap, which might not be enough for you.

£5,000 is the minimum available under the SFLG scheme not the maximum and is possibly an ideal solution in this case.

Full details are available from the DTI site here