How does getting a business loan as a new LTD Company work?

[EntrepreneurJohn]

Hello,

I would like to start an estate agency in the next few years.

I have calculated that the costs to set up and run it for a year would be £100,000.

If someone has a brand new Ltd company, how does getting a loan work? If I have for example £40,000 to loan to the company and wanted to borrow the other £60,000, how does that work without me holding personal liability?

I own my home and would like to know how this borrowing works with a brand new company, whilst my personal assets are protected from liability.

Why would a company loan to a brand new business when there's no guarantee of them making a penny?

Thank you very much!

 

[WaveJumper]

There are those on here who are in loan business and will give much better advice than myself, but in the meantime have you looked at funding circle quite a good bit of info on there
https://www.fundingcircle.com/uk/small-business-loans/unsecured-loans/

 

[fisicx]

If someone has a brand new Ltd company, how does getting a loan work? If I have for example £40,000 to loan to the company and wanted to borrow the other £60,000, how does that work without me holding personal liability?

Not so sure you can any more. The rules are changing so they can now recover debts from directors. In any case, borrowing that sort of cash will almost certainly require some sort of personal guarantee.

 

[Financial-Modeller]

For £60k, perhaps consider Unsecured Personal Loans with co-directors or co-owners, which any high st lender will offer, up to GBP25k.

 

[MarkOnline]

Or maybe get set up for much less than your projections so you dont have to borrow a penny, When you are earning good money then borrow some to open a second branch re brand etc.

I cant see an estate agent business as a capital intensive business, but there again I am not an estate agent. I recon I could fit a lovely office out for £20k if I was being extravagant (thats with one hell of a photocopier too)

 

[UK Contractor Accountant]

. I recon I could fit a lovely office out for £20k if I was being extravagant (thats with one hell of a photocopier too)

it's the BMW's, high spec cameras/lenses, drones etc that they all seem to want that breaks the Bank.

 

[Argentum Tax]

it's the BMW's, high spec cameras/lenses, drones etc that they all seem to want that breaks the Bank.

Agreed. In my experience with Estate Agents that’s exactly where the capital funding goes.

 

[japancool]

There are those on here who are in loan business and will give much better advice than myself, but in the meantime have you looked at funding circle quite a good bit of info on there
https://www.fundingcircle.com/uk/small-business-loans/unsecured-loans/

Funding Circle require personal guarantees, and they are extremely aggressive at chasing them too. So if you're not 100% confident of the business prospect, don't go for them.

 

[Mark T Jones]

The simple answer to your question is no, nobody will lend to a Start Up without PGs - most High Street banks will also require a charge over property.

There are however a number of options available if a PG is on offer

 

[Mark T Jones]

Funding Circle require personal guarantees, and they are extremely aggressive at chasing them too. So if you're not 100% confident of the business prospect, don't go for them.

As will be any professional lender - otherwise there is no point taking them.

For the records, Funding Circle only lend to businesses which have been trading > 2 years.

 

[fisicx]

In other words @EntrepreneurJohn, if you want the cash you need to accept personal liability

 

[Glenn Martin]

You will probably have to raise the cash outside the business as with zero trading history you will struggle.. There was a scheme that became the CBILS where you could get a government backed loan but I assume they have disappeared now. Are you buying an approved franchise ?? as they may have special funding arrangements if they have a proven model. You can get a start up loan of £25k form the likes of Virgin money, where the money is loaned to you personally and you can then introduce it into the company but you will still £35k from somewhere. Also if you need £100k don't start off with £40k and hope something will turn up, it doesnt and you will blow the £40k. Funding circle etc wont look at you until you have 12 months trading.

 

[Chris Ashdown]

If you dont have the confidence to put your house on the line, why do you expect a lender to take all the risk

If you posted a very basic list of your calculations on what you would spend the £100,000 on before you started making a profit than maybe some expert could check over your expenditure numbers and see if there are any area's you could cut back on the required money needed