Legal advice required

[plbteam]

Could you please advice me on the following statement?

I am almost ready to start-up my own business and went few bank to apply for small business loan. unfortunately, every bank which I have visited said that they are not able to fund me unless if I can invest 50% of the money i am looking to brow.

This is why i am looking into getting personal loan. My question is, if i got a personal Loan, will i able to use some of the money into my business as personal investment? if not how can i use the personal loan money into my business?

What are the problem of using the personal loan as personal investment?

Please advice me on this.


Many thanks

 

[Paul_Rosser]

If you are getting the money personally you can invest it in the business as a directors loan and then pay yourself back once the company has enough cash in it.

 

[teddys]

You could introduce the money in to the business either as capital or as a loan and take it back when the business has sufficient cash flows.

 

[plbteam]

Thank you Paul_Rosser & Teddys,

My main concern is that few people have been told me that if I use a personal loan into my business, it will create me troubles. The loan company who have lend me the money would take legal action against me. Is that true?

Thanks

 

[OldWelshGuy]

it is only true if you lie about the reason for borrowing the money, and then I doubt they would prosecute or even look further.

 

[plbteam]

Thank you "OldWelshGuy"

When applying for a personal loan, if I or anyone said that they applying a personal loan is for investing on a business, then they would not lend you any money. i have tried few bank and they said the same.


if i apply via online and i picked as "Other" for the reason of loan, it this would helpful to prevent that the loan is for business investment?

is something you may able to correct me? if i am wrong?

 

[internetspaceships]

Frankly if you pop along the the bank who is going to lend you 50% and tell them that you've borrowed the other 50%, you're going to be no better off than you were.

Banks want to see 50% of your OWN MONEY.

 

[Spongebob]

My main concern is that few people have been told me that if I use a personal loan into my business, it will create me troubles. The loan company who have lend me the money would take legal action against me. Is that true?

Thanks

A personal loan is made purely on the basis of your credit rating and there are no restrictions ast what the money may be used for.

Most start-up businesses have always been over-leveraged, with many being financed by personal credit cards in the early days. If things work out then the loans will be repaid and everyone is happy.

If things go wrong however, you will face possible bankruptcy.

But If you have little or nothing to lose you may as well have a gamble!!

 

[businessfunding]

In most cases you will be asked for tthe purpose of loan and will have to be a little 'creative' about this. This is a matter for your own judgement as they are unlikely to check this out.

Your bank will want to know the source of your cash input and your cash and will take repayments into acount. It is probablt that this will result in a decline.

If you go this route it woul probably be best to fundd the whole thing with personal loans.

 

[Alan R Price]

Never, ever, lie to a lender about anything unless you are prepared to take the consequences of being found out. It is fraud. If you repay the loan nobody will be bothered but if your business fails and you can't keep up the repayments you will at best probably be put on the bad debts register. At worst? Well, it is fraud, as I say.

 

[plbteam]

Thank you all for your helps and suggestion. it is really help me to make my decision.

 

[arcon5]

A bad debts register? Does one even exist? It will be marked as defaulted on the credit report if that's what you mean.

I suppose it could be fraud by mis-representation... but it's highly unlikely the finance company would go down this route. That's if they can prove it of course. 'Yes officer, the loan was for home improvements... you should have seen the state of my house before I spent the money on this decoration and such..'

Look, lets be real here... most new business' will use credit supplied for personal use to fund it... if you have nothing to loose i'd say go for it (as long as your business plan is realistic). The problem is the bank may see you have this loan (credit report) and see you as a higher risk.