Getting a Small Business Loan, Anyone Got Experience?

[ttmw]

My business plan is almost complete and i'm looking to get a small business loan from the bank of around 5-7k to help me start up. I already have/will have 2-3k saved for the investment and to try and help reassure the banks a little more.

My question is...has anyone else here gone for, and succeeded in getting a business loan before? Or has anyone got any advice in helping me to get the loan approved?

My business (online only at the moment) is only making about 6k a year currently and previous years have been 1-2k, so i haven't got a huge amount of financial clout.

Any advice? I don't want to blow it

 

[Strath]

You'd probably be better off by extending your own overdraft and use credit cards for a value of that amount. If your careful with it you could probably do it with paying very little interest on that value

 

[TheMD]

A friend recently applied for a business loan (established business, 12 years old £4m/year turnover, profit in the region of 45k), and for a loan of £300k, he had to raise £100k himself also before the bank gave him consideration.

Try to have a backup plan if you can as suggested by Strath.

 

[ttmw]

A friend recently applied for a business loan (established business, 12 years old £4m/year turnover, profit in the region of 45k), and for a loan of £300k, he had to raise £100k himself also before the bank gave him consideration.

Try to have a backup plan if you can as suggested by Strath.

4m turnover and only 45k profit!? Sounds like a scary business to be in to me lol. I'm not sure i'd back that either haha.

I'm not sure credit cards is a wise option either really. You can get 13 month interest free but after that i'd be screwed big time at the interest rates. Is there another way to do it? 2k is the limit i can get on my CC currently, and that's with my own bank.

 

[Funding Operation]

business loans, overdrafts, credit cards etc etc etc. Question 1: Do you have friends and family who believe in YOU, not the business at first but YOU, as this is always the best route to investment at first. In my experience with banks and business loans and the experience is extensive, it doesnt happen, if your credit worthy go for an unsecured loan, a personal loan, dont say its for business as your be blown out the water, go for the path of least resistance. But first port of call would be family and friends.

Question 2; do you own your own home, if so raise money via a secured loan, if your serious about your business and believe in it then why wouldnt you do this. I can help you with this.

Question 3: Why do you need the money, on your turnover so far it doesnt sound like it does much (no offence), do you need if for stock, salary etc, sometimes you can find other ways to move it on without money, bartering skill sets off to achieve what you need to do etc.

Banks love to say yes yes yes and then a No, you shouldnt be doing a business plan just for the Bank, you should be doing a business plan for YOU, to understand and lay out your vision and strategy for your business, also try try and try again, you wont blow it, your just have to keep trying, the only thing is you can waste alot of time trying to raise money and get no where, what you might like to do is scrub looking for money and think outside the box to find another way to get your business up and running, organic at first, you may think that raising money or running the business with the majority of other peoples money is easier but in the long run it isnt as certain pressures come with this. let me know what the purpose of the money raising is and may or may not have some suggestions. GOOD LUCK

 

[businessfunding]

I'm not sure credit cards is a wise option either really. You can get 13 month interest free but after that i'd be screwed big time at the interest rates. Is there another way to do it? 2k is the limit i can get on my CC currently, and that's with my own bank.

At this stage I would be looking at ROI and timings, not at interest rates. Credit cards (even high interest ones) can be an excellent way of bridging a short-term funding gap, however many of them require a 5% monthly pay-down, so if you need the money for longer the repayments will cripple you regardless of interest rate. (hint - check pay-down!)

As previously suggested, this level of investment you should be looking to FFF. If you don't want your parents to take the risks, then why would you expect a bank to?

With all respect to other poster, any information posted on behalf of 'a friend' is likely to be missing some detail. Banks are still lending, but are undoubtedly being selective - start up business has never been an easy sector, and certainly isn't now.

 

[TotallySport]

have you tried Zopa?

 

[ttmw]

Zopa doesn't seem to want to give a quote if your income per year is less than 10k, but thanks for the suggestion anyway

I haven't really got friends or family with any money like that to even make a dint in the required amount. Maybe i should start to hang about at the golf course a little more

 

[thecyclingartist]

When I opened my biz account I also applied for a loan, in the end a 2K overdraft was actually the better option - much more flexible for me and in my financial situation no worse an interest rate.

I was in a different position with about 9 years of accounts behind me, but what the manager seemed most impressed with was my very specific financial plan for the money, and the market research behind it. (I was looking to secure new premises.) I could show exactly what sales volume and change in public visits could recoup the funds and in what time frame, based on past years I could also show this was easily achievable.

I'd assume that sort of information is in your business plan.

Tina.