Been turned down for a bank loan - Need help!

[champerington]

Hi all,

Been a few months since I was last on.

My business partner and I have now a sound business plan, but unfortunately have been refused a 10k loan from the bank.

Its a new sports nutrition company targeting a niche market.

We have a website fairly well progressed and just need the investment to get things up and running.

Just wondering if anyone could help or advise on what we could do.

Any help would be greatly appreciated.

 

[alasdair1982]

Hello

Ask why the bank turned you down? A good source of finance for business is funding circle (dot) com but i think you have to be ltd with 2 yrs accounts

Is there no possibility of raising it without borrowing

 

[champerington]

They feel there is too much risk, without sales or traction.

Unfortunately all we can gather ourselves is 1k.

 

[alasdair1982]

Hi

So if someone was to invest 10 k what would they get out of it. I have a friend who runs a gym and this may be something he might be interested in

 

[ThomasBuckland]

10k Hmmmm try: http://www.burnleysavingsandloans.co.uk - It was a programme about this exact point. Was called bank on dave, he made a doc about how small businesses cannot get loans from banks because banks are W*****s. Sorry about my french but its true.

If I had 10k to spare I would give it too you matey as getting a loan nowadays is a pain. I know a few people who had this problem, it was more than 10k was actually 50k but he believed in his business.

If you just wanted a loan and not an "investor" it is difficult. If you need the money asap check out: 8 Ways to Finance Your Business

Hope that can help you.

 

[Talay]

Get jobs, get 2 jobs each, or more. Save all your money and if you do that, you'll have £10k in no time.

I own shares in banks. I also have money on deposit in banks. I am not sure I would be happy if those banks were giving away my money to people who were not prepared to put in any of their own money and whose business plan seems based on getting money to "get things up and running".

Sorry but you'll need to reach proof of concept and most likely orders and then you'll need far more than £10k I suspect.

I think you need to revisit your business plan and work out where funding could come in after you have self funded the project past the initial get up and go phase.

 

[champerington]

Well if someone were to invest 10k, we would be very open to negotiating a reasonable return!

Unfortunately personal circumstances dictate that I'm unable to work 2 jobs. My partner is pretty much in the same boat.

Although not significant we so have intent to order from several clubs/teams.

Thanks for all advice folks.

 

[Lucan Unlordly]

Do you own your own home or have anything else of value?

 

[champerington]

Unfortunately I don't no.

 

[Lucan Unlordly]

So you have half a website, no money, cannot raise any cash yourselves, you have no confirmed orders, no worth to fall back on or secure the loan against and you expect the bank to give you £10k?

You could try religion as you'll need a miracle to get any investment unles you can pad out the above.

 

[choorian]

Try getting a local govement loan. If you have a really good business plan, they'll fund you but you have to put some money in yourself. We got a 10K loan from Rosebud but we invested a lot of money ourselves and had an water tight business plan.

We went through the Orvia group, there's no harm in trying.

 

[Lucan Unlordly]

Try getting a local govement loan. If you have a really good business plan, they'll fund you but you have to put some money in yourself. We got a 10K loan from Rosebud but we invested a lot of money ourselves and had an water tight business plan.

We went through the Orvia group, there's no harm in trying.

Did you miss the bit where the OP said he has just £1k?

 

[crphillips]

If your in full time employment then go to the bank and ask to borrow 10k to buy a car........not to start a business. If your credit rating is good a bank will easily lend 10k to buy a car.

Otherwise you could get a couple of personal credit cards between you and easily get 10k........interest rates will be pretty high though so you've got to decide whether it's worth it.

Just make sure when approaching lenders you don't tell them it's to start a business.....tell them it's to buy a car, home improvements, debt consolidation......anything other than starting a business.

If your not in full time employment then get a job and save 10k.

 

[jeneliapeterson]

You need to give guarantee to the bank for the loan. Without guarantee, very few banks pass the loan of 10k.

 

[vvaannmmaann]

OP have you considered the "Crowdfunding" type sites?

 

[SourChocolate]

If your in full time employment then go to the bank and ask to borrow 10k to buy a car........not to start a business. If your credit rating is good a bank will easily lend 10k to buy a car.

Otherwise you could get a couple of personal credit cards between you and easily get 10k........interest rates will be pretty high though so you've got to decide whether it's worth it.

Just make sure when approaching lenders you don't tell them it's to start a business.....tell them it's to buy a car, home improvements, debt consolidation......anything other than starting a business.

If your not in full time employment then get a job and save 10k.

Good few years ago I received a loan offer from Barclays "borrow up to £25k, typical ~7% APR", thought "great, I can probably invest and get return better than 7%". Tried to apply online and one of the fields was "Purpose" with a list including wedding, holidays, car (essentially "consumption") but no investment type of option. Decided to pay Barclays a visit. Very nice lady invited me to a room and after the initial chat it went more or less along these lines:
- So, I'd like to borrow £25k
- Sure, let's have a look - what's the purpose for this loan?
- Investment
- Oh, I'm sorry we don't lend for investment purposes so won't be able to help you
- Hmm, why not?
- "we don't"
- You know what, I think I've changed my mind, actually I'm going to spend it on my wedding and honeymoon
- But you said "investment" so I don't think we can proceed
- I'll use the wedding money I have for investment and this loan will be for wedding wedding
- Ah, that's ok

30 mins later got £25k @ 6.9% :|

Couple of points which I'm still puzzled about:
- they were ok me to flush £25k down the drain (from ROI perspective ) but were not ok me to risk that money and have even a tiny chance of making some money out of it? Even if the investment idea was the craziest one in the world, probably still safer than pure consumption? :|
- why do they ask for purpose - the loan is unsecured and nobody checks it anyway? Why bother?

Well, the final was that I got nice ROI and paid it off earlier.

To OP - if you have a good credit history, that might be one of the options to consider, alternatively you can try crowdfunding - some communities do not require giving that money back.

 

[Vectis]

So, neither you nor your partner own your own homes? And, between you, you can only find £1k to fund the business? Yet you want £10,000 from a bank? How long has it taken you to get the £1k together?

Just a few thoughts.....maybe the business plan isn't quite as good as you think it is. I have to say that I, personally, wouldn't lend you £10k based on what you've said here. I'd want a lot more financial input from you and your partner and I'd want some form of guarantee that I'd get my investment back (the same as the bank would want their investment back). Without any property or anything else as collateral and, seemingly, no money of your own, it doesn't sound too promising.

Sorry to be negative, but I'm on the side of the bank here.

 

[crphillips]

I can understand them preferring to lend you money for a car,debt consolidation, home improvements.......etc over a loan to start a business.

If you buy a car with it then there is something physical they can sell. If you improve your home your adding value to your home. If you consolidate debts your not really taking on extra debt (assuming you do actually consolidate debts with the money). If you invest it there's a good chance it disappears.

I've never understood why they would prefer you to spend it on a holiday or wedding or similar though

 

[businessfunding]

3Fs is the way forward here.

Create a mini crowd - fund from among your family & acquaintances.

That is of course having sold or pawned everything you can and looked at every possible way to get things rolling on what capital you have.

 

[zigojacko]

OP have you considered the "Crowdfunding" type sites?

To follow on from this, have you considered something like this where people will donate money if they like your idea in exchange for discounts (or something else in return).

 

[Big Pete]

So you have half a website, no money, cannot raise any cash yourselves, you have no confirmed orders, no worth to fall back on or secure the loan against and you expect the bank to give you £10k?

You could try religion as you'll need a miracle to get any investment unles you can pad out the above.

I love this reply ,its so accurate ..

And they will shout them damn bankers are not lending !!! am i right ?? oh you could write a book about the new generation ,unbelievable .

 

[SourChocolate]

I can understand them preferring to lend you money for a car,debt consolidation, home improvements.......etc over a loan to start a business.

If you buy a car with it then there is something physical they can sell. If you improve your home your adding value to your home. If you consolidate debts your not really taking on extra debt (assuming you do actually consolidate debts with the money). If you invest it there's a good chance it disappears.

I've never understood why they would prefer you to spend it on a holiday or wedding or similar though

Loan is not secured against the car though so would think it would be equal to spending cash on fish & chips.

Once you get married, you jump a few levels in terms of your credit rating.

Holiday - that's investment in yourself, you go away, relax then come back with fresh mind and have more determination to work harder to pay off the loan.

Well, there might be some logic behind it after all...

 

[herewegoagain.]

Come on guys ! give these people a break ! - at least they are TRYING to get up and running.... they could just as easily sit on their backsides claiming benefits...... but no, they are trying to get a business up and running....

It is hard getting ANY money from the banks... why dont you buy some stock and sell at local markets to start off? promote with business cards (say different days at different markets - expanding the area...that way you will raise some extra revenue without any real risk......

good luck...

 

[DuncanH]

Come on guys ! give these people a break ! - at least they are TRYING to get up and running.... they could just as easily sit on their backsides claiming benefits...... but no, they are trying to get a business up and running....

It is hard getting ANY money from the banks... why dont you buy some stock and sell at local markets to start off? promote with business cards (say different days at different markets - expanding the area...that way you will raise some extra revenue without any real risk......

good luck...

I would listen to this, it is a good idea, you don't need to jump in with your own product! This will prove you can sell not to the banks but to yourselves and hopefully generate some money for your investment.
Good luck though I know where your at I'm having to fund my own venture, I have one reasonably successful business but I want to branch out into a different field but my bank won't help so when it works out and it will I'm changing banks and letting them know exactly why (it wont change anything i know but it will help me make it work) when the economy turns round there are going to be some very upset bankers about wondering why we are not using the big four high street banks!

 

[Steve88]

I recieved funding through the job centre I went and explained to someone that if i can have some investment through them I would be able to sign off within weeks which i have now done, I can not sign on for 2 years and have had to show reciepts for everything but it seemed like a good investment to them so they did it! Im now almost in a position to start trading.

not sure if it will be of much help to you but its worth a try!

Best of luck

 

[TickledPink]

Have you considered crowdfunding? That's the buzz word in raising finance for projects these days.

You create a pitch, upload it to a crowdfunding sites and promote it. Hopefully enough people will part with a tenner or more to help you reach your funding goal

The trick is finding the right site. Most crowdfunding sites are geared towards raising money for creative projects or charities. However, there are a few which help you raise money for business. The largest UK based business crowdfunding site is probably Crowd Cube.

 

[businessfunding]

when the economy turns round there are going to be some very upset bankers about wondering why we are not using the big four high street banks!

Not really - the minute the banks open their doors again there will be queues.

I am old and jaded enough to remember the mid '90s when every business owner swore they would never trust a bank again.

 

[Lucan Unlordly]

Come on guys ! give these people a break ! - at least they are TRYING to get up and running.... they could just as easily sit on their backsides claiming benefits...... but no, they are trying to get a business up and running....

It is hard getting ANY money from the banks... why dont you buy some stock and sell at local markets to start off? promote with business cards (say different days at different markets - expanding the area...that way you will raise some extra revenue without any real risk......

good luck...

No problem with people TRYING but they have to show some ability to self finance in tune with the level at which they want to borrow.

 

[Big Pete]

Come on guys ! give these people a break ! - at least they are TRYING to get up and running.... they could just as easily sit on their backsides claiming benefits...... but no, they are trying to get a business up and running....

It is hard getting ANY money from the banks... why dont you buy some stock and sell at local markets to start off? promote with business cards (say different days at different markets - expanding the area...that way you will raise some extra revenue without any real risk......

good luck...

No i will tell you what the problems are !! These new companies start with jack sh.. .. they lease vehicles . then get suppliers to give them credit .. and fold they walk away unscathed while the decent companies who have for years built a solid company take the hits..

People need to live without flash cars and exotic holidays etc the ipods , but save save then start a business ,the proper way small and grow and generate and reinvest etc etc . not this living in minus equity modern way ...of i want it all and pay later ...

 

[Bumblebuzz]

<<Comments Removed By Mods>>


Anyway, OP. Carry on what your doing. Save everything you can. The more money you can put in your self... the more chance you'll have at securing funding.

As someone else previously said, market stalls. OK, not ideal. Not classy, but hey.. they work to get the cash in. Try "trade shows" too. You'll easily raise a few hundred quid before you know it.

Failing that, as crPhillips said. Personal credit cards. Again, not ideal. But certainly a sure fire way of securing money. Check your credit score on "credit expert" (or similar). You'll get an idea of the sort of interest rates you can apply for.
Even 'Current Accounts' with the bank. Some offer decent overdrafts with very reasonable rates... Work out the difference on interest between these and credit cards then go from there.

 

[cjm1982]

<<Comments Removed By Mods>>

As someone else previously said, market stalls. OK, not ideal. Not classy, but hey.. they work to get the cash in. Try "trade shows" too. You'll easily raise a few hundred quid before you know it.

I might be being a bit slow here, but what's your suggestion with market stalls? Sell their nutrition product through market stalls to start off with?

 

[Bumblebuzz]

I might be being a bit slow here, but what's your suggestion with market stalls? Sell their nutrition product through market stalls to start off with?

Someone else suggested it, although I can't find the post now?! And sure why not? If the OP and his partner are struggling to raise cash. They need to try/do everything else possible they can think of?

<<Comments Removed By Mods>>

 

[champerington]

Thanks for all the comments and discussion. A lot of useful information.

We are fully aware that we aren't that attractive a proposition to the bank for lending, that we aren't disputing.

We simply wondered if we could have some views on our situation.

 

[Chris Ashdown]

Web sales will be crap from the start, you can expect only a couple in the first 6 month as you cannot afford PPC to get people to view your site and cannot afford any other advertisments to get customers

All you can do is buy limited quantities and start selling face to face and build up from there. Expect no wages from the first year and re-invest all into new stock and getting higher rankings for the web site

Sell on ebay you can always find some mug to buy anything on there

Cut grandulouse plans and think small, what can I do with £1K

 

Market stall for a niche product.. so 1 person in 100 might have the potential to be a customer

waste of time when you should be contacting a group where everyone is potential customer!

If you want to sell cheap clothing then go for a market stall, if you want to try and create a branded product for a small market segment perhaps try and contact them directly

 

[louiep]

Have you looked into the Enterprise Finance Guarantee Scheme? Its a scheme where the government guarantees 75% of the loan. Its supposed to get banks lending to new and small businesses.

 

[money24seven]

There was a TV documentart done on Bank of Dave a few months ago. He has set up a great plan and hopefully it will now be implimented across other areas of UK

 

[bizloanservices]

Have you looked into the Enterprise Finance Guarantee Scheme? Its a scheme where the government guarantees 75% of the loan. Its supposed to get banks lending to new and small businesses.

Won't help in this case I'm afraid. The scheme is not that easy to access because the decision to lend still lies with the bank and includes a crucial sentence ... "where the lender determines the business is viable".

The scheme was designed to help banks get over the final hurdle ... lack of security.

Banks barely mention the scheme today unless prompted to by more savvy customers.

 

[crphillips]

Have you looked into the Enterprise Finance Guarantee Scheme? Its a scheme where the government guarantees 75% of the loan. Its supposed to get banks lending to new and small businesses.

We're talking about 10k here. If you seriously can't get your hands on 10k then there's something seriously wrong somewhere and you should maybe stand back and re-think.

 

[businessfunding]

There was a TV documentart done on Bank of Dave a few months ago. He has set up a great plan and hopefully it will now be implimented across other areas of UK

Bank on Dave did good work in highlighting the fact that banks are not the only funders (lets not go into the other nonsense talked on it)

In reality there is nothing new or innovative in what he has done; there are many alternative funders out there, though in this case I can not see any of them helping.