startup cashflow advise

[seanieg]

hi everyone,
My wife and myself want to set up a restaurant together. We both have many years experience in this field and have decided we would like to slog our guts out whilst working for ourselves and not for someone else.
We will need approximately 100k to set this up and do not have funds ourselves, so basically would like to know if it is possible to get a bank loan for this amount without signing our house over as security ( my wife is very apprehensive about this signing house over as her parents invested a lot of money into a hotel during the eighties only for the recession to hit them hard and them to end up bankrupt and lose everything so really doesn't see this as an option ). Also if we were to find an investor or third party to come up with the money how does this usually work ie; repayment terms, do they require some sort of security ( i appreciate one investor is probably different to another but just a rough idea would be great).
At this stage we have not drawn up a business plan so the figure is just a starting figure but really want to know our options before take it to the next stage.
i look forward to your replies. Thanks.

 

[Ian J]

We will need approximately 100k to set this up and do not have funds ourselves, so basically would like to know if it is possible to get a bank loan for this amount without signing our house over as security.

I'm afraid that if you have no funds to invest yourself and you don't wish to sign a personal guarantee this will be a non starter as neither a bank nor any other financial institution is likely to back you

 

[Down not out]

Hi,

If you think you'll need £100k then bank on needing £150k. If you have no money to put into this yourself, I'm afraid you'll struggle to get anyone to lend you anything.

I've just been through the journey you're thinking about and had to put up 40% of the total investment in liquid cash and then sign PG's for the 60%.

In addition to this, you'll also need working capital to cover your Pre opening costs and the early months while you build trade and your team get up to speed. This will depend upon your business but could be anything between £30k and £70k.

Good luck.

 

[Billmccallum]

the reality is that if you are not prepared to take any risk, why should anyone else????

 

[businessfunding]

Hi,

If you think you'll need £100k then bank on needing £150k. If you have no money to put into this yourself, I'm afraid you'll struggle to get anyone to lend you anything.

.

And if you need £150K, think of giving solid security of £250K plus

Trutrh is you are entering a high risk sector in a poor market without security

To seek investors you would need to show them something innovative and with good growth people. Most of all, you would need to convince them why you are the people to run it...

 

[FlowOnline]

Unfortunately, this is the truth. You have to put forward some collateral with a loan this size.

Have you had any luck with finding a third party investor? Again, this is something you will have to research and negotiate with each individual party.

Good luck with your business plan!

 

[seanieg]

thanks everyone for your replies, i think you basically told what i thought i already knew which is its not going to happen without some security for the bank ( ie; house as insurance )
I am going to have to try and talk my wife round and see if she is prepared to do this. If i manage to convince her are there any banks/companys that are more likely to loan an amount of this size than others.
Thanks again

 

[seanieg]

Well the good news is that my wife is now on board with approaching the bank. So now we can really focus all our efforts on our business plan. Are there any banks which are better to approach or give us a better deal than others or any to avoid. Thanks

 

[businessfunding]

I would suggest that you start with a beauty parade of banks, including perhaps some minority ones such as metro.

In part it will relate to your circumstances - what are their merchant terms? If you are banking cash, how easy is it to do so

Leading of hard assets might help to top up banking facilities

You may already know, but from experience of funding dtRt up restaurants, key fall over pints are:

Over investment in premises and equipment. Intelligent cost cutting can be vital to manage initial cashflow

Delayed opening - often attributable to granting of licences or permits or contractor disputes. Nothing burns cash like empty premises paying rent, loan/lease repayments and potentially even wages

Lack of appreciation of the extent/cost of marketing to drag the punters in.

Pay attention to these and you will be ahead of the rest!