Buying an establised bussiness, finding finance

[PhillipP]

Myself and my girlfriend are looking at buying an established business. This includes a substantial Cafe / tea room, Post Office and very busy shop.

I have all available accounts, the business pays for itself and now need help sorting the finance, a business plan and cashflow projection.

I won't post hard facts and figures just yet, I'm unsure about that.

Talked to a fair few brokers and banks over the last few weeks and still nothing seems to be happening for one reason or another, whether that be the business sector, credit history, income etc etc.

The only company to actually have given us any real indication of finance is Corporate Advances. Now, they have visted us and were more than clear about all costs and upfront fees.

All help and advice is very much appreciated.

Phillip

 

[businessfunding]

The availability of funding will be dependent on a number of factors, key amongst which will be the amount you are personally introducing to the business and the fallback security available.

I would be extremely cautious of any broker who 'offers' terms significantly better than the others - truth is it is a smallish lending market and it is highly unlikely that any one broker has access to a 'golden pot'.

I would be doubly cautious about paying any up-front fees withoput a firm contract saying the terms on which an offer will be made - no offer = full refund of fees (or perhaps a nominal management charge). Do not sign or pay without checking the contract! I'm afraid that there are a significant minority of crooks in this sector!

 

[PhillipP]

The availability of funding will be dependent on a number of factors, key amongst which will be the amount you are personally introducing to the business and the fallback security available.

I would be extremely cautious of any broker who 'offers' terms significantly better than the others - truth is it is a smallish lending market and it is highly unlikely that any one broker has access to a 'golden pot'.

I would be doubly cautious about paying any up-front fees withoput a firm contract saying the terms on which an offer will be made - no offer = full refund of fees (or perhaps a nominal management charge). Do not sign or pay without checking the contract! I'm afraid that there are a significant minority of crooks in this sector!

We can raise a 25% deposit through remortgaging, maybe slightly more with help from family. Now I know selling would br preferable as in effect we're then borrowing 100% but right now, untill we've settled at the new business renting it out would be preferable. Will certainly sell up once settled and we know things are working out.

Appreciate the input and advice on the fees and charges, any ideas of where else might be able to help us, and fairly quickly?

 

[businessfunding]

I can introduce you to a broker who I personally trust, but would issue exactly the same cautions as I do in my first post.

PM me if you would like details.

My gut feeling is that the cash stake is not sufficient as I assume that there is significant goodwil and stock above the freehold value?

Out of interest, what has been the general feedback?

 

[PhillipP]

I can introduce you to a broker who I personally trust, but would issue exactly the same cautions as I do in my first post.

PM me if you would like details.

My gut feeling is that the cash stake is not sufficient as I assume that there is significant goodwil and stock above the freehold value?

Out of interest, what has been the general feedback?

That sounds great, I'll fire you a pm shortly.

The offer price they accepted included all stock.

Generally the feedback has been 50/50, and out of that most say in principal that they can get near to what we need and looking at some of the provisional offers they are all failry close and still affordable to take on.

There is no metion of goodwill in the accounts or offer made. The offer I made was inclusive of the stock.

I'll pm you more deatails, much appreciate the input

 

[Admor]

The size of the deposit is only one factor and most lenders look primarily for the ability of the business to repay any debt. To help establish that, they usually seek a Business Plan including Cashflow projections and so I am not sure how you are getting any quotes / responses when you say you do not have these prepared yet?

If you had these prepared well you would increase your chances of securing funding.

 

[10032012]

Myself and my girlfriend are looking at buying an established business. This includes a substantial Cafe / tea room, Post Office and very busy shop.

I have all available accounts, the business pays for itself and now need help sorting the finance, a business plan and cashflow projection.

I won't post hard facts and figures just yet, I'm unsure about that.

Talked to a fair few brokers and banks over the last few weeks and still nothing seems to be happening for one reason or another, whether that be the business sector, credit history, income etc etc.

The only company to actually have given us any real indication of finance is Corporate Advances. Now, they have visted us and were more than clear about all costs and upfront fees.

All help and advice is very much appreciated.

Phillip

This isn't completely relevant but why are they selling the business?

 

[businessfunding]

The size of the deposit is only one factor and most lenders look primarily for the ability of the business to repay any debt. To help establish that, they usually seek a Business Plan including Cashflow projections and so I am not sure how you are getting any quotes / responses when you say you do not have these prepared yet?

If you had these prepared well you would increase your chances of securing funding.

I broadly agree; though every business plan ever written shows ability to repay, so the concept of evience will be important.

 

[Talay]

Borrowing on your residential property to provide a deposit upon which you want 300% gearing to purchase a business without apparently having any current savings of your own is not going to happen in my opinion.

Quite simply, if you could not save before remortgaging you home, how do you expect to pay a higher mortgage in the future ? I know, from the business, but you want to borrow 75% of the purchase price when your 25% deposit is actually not your own money but is again borrowed.

You are essentially asking a multitude of lenders to advance 100% of the purchase price of the business and this will only happen if you have huge untapped equity in your residential property, exceeding the business purchase price, effectively negating the need to borrow in the first place.

 

[vvaannmmaann]

Do the Post Office intend to keep the Post Office counter open?

 

[PhillipP]

This isn't completely relevant but why are they selling the business?

The current owners wish to go back to larger scale catering in the Hotel industry, having runa few before. They built this up from nothing but just dosen't seem big enough for them now.

 

[PhillipP]

Borrowing on your residential property to provide a deposit upon which you want 300% gearing to purchase a business without apparently having any current savings of your own is not going to happen in my opinion.

Quite simply, if you could not save before remortgaging you home, how do you expect to pay a higher mortgage in the future ? I know, from the business, but you want to borrow 75% of the purchase price when your 25% deposit is actually not your own money but is again borrowed.

You are essentially asking a multitude of lenders to advance 100% of the purchase price of the business and this will only happen if you have huge untapped equity in your residential property, exceeding the business purchase price, effectively negating the need to borrow in the first place.

We have some savings and family are willing to help out but, the majority of it will have to come from selling or remortgaging our current property. As you say in effect, borrowing 100% which lenders are a bit wary about.

That said, with our part time incomes and the income from the business, paying the higher mortgage(s) would not be a problem.

 

[PhillipP]

Do the Post Office intend to keep the Post Office counter open?

Yes, they do, for the foreseeeable future.

 

[Charleston_Financial]

Hi Phillip,

The first thing to mention is to avoid paying any upfront fees, in respect of being able to obtain a mortgage for the purchase, feel free to contact one of our mortgage advisers and they will happily run through the finer details and provide you with a clearer picture on what you are likely to achieve in the current mortgage market.

 

[Balmore Asset Management]

Hi - I have too had dealings with Corporate Advances but would also be interested to speak to your trusted broker if you would be so good as to advise contact details?

many thanks