Struggling With Start Up Costs

[RedMacbeth]

After months of planning and researching i was looking forward to launching my business within the next few weeks but the spanner in the works is that i'm short on start up costs by £800. I appreciate this is not a great deal of money is some areas of business but its causing me problems. I cannot start the ball rolling until i have covered all costs.

I have recently applied for two forms of credit which were declined, i have been informed that the applications were declined as i have no credit/debt such as loans or credit cards. They advised that my mobile phone contract/bank accounts/overdraft did not count towards the lending criteria. I feel i am being penalised for being sensible and maybe slightly old fashioned. If i couldnt afford something, i would save for it rather than pay on credit. Occasionally i dip into my overdraft but pay this back within a month or so depending on the amount.

I have been speaking to my bank who i have been with for over 20years to explain my issue and enquired about opening a business bank account with them alongside side an overdraft for £800. They advised my personal history would not be taken into consideration and it would be based on the credit report which would also be likely to be declined as i have no credit history.

I've been working all the overtime i can get and looking locally for opportunities to raise some more money, i've cut back on any additional expenses and saved every penny. I refuse to be defeated by £800 but feeling very disheartened. I could put back the launch by a few months to raise the money through working overtime with my current employer but i only want to postpone as a last resort!

I would be grateful for any advice? If anybody knows of any short term work/opportunities in the Glasgow/Central Scotland area then give me shout

 

[FluxServices]

Speak to Gillie on here about a business loan, He might be able to help you.

Cheers

 

[needaprint]

Banks can be a pain...you have a clean record (or no record) and they dont lend to you...but people with the worst record in the world can get all the finance needed. The quickest way is to get a credit card and even put some bills on it and then pay it on time comletely and you will get a record. Problem is they want to see a few months, etc.

It is stupid that they want a history from someone who doesn't want or need a credit card. Although on that note could you not get a credit card with 0% interest for the first 12 months and use it to fund the investment?

 

[SharpShooter]

Have a look at any grants available at your local Business link!! They always have new grants and loans for start ups and if you meet their criteria, it is worthwhile filling in the paperwork.

 

[KidsBeeHappy]

Do you have anything that you can sell?
Sometimes we see the hard ways to raise money and miss the easy ones.

 

[ginantonic]

Do what I did and stick a load of stuff on eBay - started off my business with the proceeds.

 

[My Owl 1]

Hi What is your proposed business.

best wishes

Avril

www.savemoneywithus.co.uk

affordable utilities for businesses and home

 

[Officebird]

I've had this problem in the past and it really is annoying to see people who are bad with money get it handed to them on a plate.

Try zopa as they will look at the reason for your low credit score so may be more willing to help.

If your proposed business has a social aim try approaching larger local companies for sponsorship.

Don't rule out friends and family either. Present them with your business plan and an affordable payment schedule that you could sign.
If you have to postpone use the time to research competitors and ensure you are ready for the big day.

What will your business be?

Good luck!

 

[estwig]

Hi What is your proposed business.

best wishes

Avril

Come on spill the beans, people might be able to help with the start-up costs if they knew a little more.

 

[Gillie]

Speak to Gillie on here about a business loan, He might be able to help you.

Cheers

HE?? Gee thanks!! I am all woman!!

To the Op ... if you are wanting a mere £800 why not do that one thing which will also get you better credit rating? Take out a credit card!

 

[RedMacbeth]

My business is going to be a social website/online directory targetting photography. Its a niche marget but i'm hopeful it will provide me with enough income to give up the day job to then work on bigger projects.

Gillie, I have applied for credit cards but been delined, not because i have bad credit but because i have no credit history/no debt. I'm not going to risk applying elsewhere at the moment as i dont want too many searches on my credit file in a short space of time but for a future reference, do you think i'll have to apply for a credit card with high interest rates such as capital one just to build up a credit history?

 

[Gillie]

You merely have to have a card, spend a small amount on it then pay it off immediately before interest hits the account, so therefore any card as long as you manage it correctly will help with building up a history for you.

 

[PaddyPawsPetServices]

RM, you dont mention your age, but it may be worth contacting the Princes Trust

 

[Submarine Washer]

Either
(1) get with the system and borrow on credit card or
(2) stay out the system and save it up from earned income and delay the start-up
Both have benefits

What biz is it?

 

[Phil Deem]

Perhaps you can change the business model to save those costs initially.
Test the idea on a lower cost base to establish demand.
If the demand can be demonstarted, your lenders will open their purse strings.

Phil

 

[jon.dc]

If you are struggling with £800 to start up, what happens when you hit a problem requiring financial input, will you stay afloat. I have a customer who is now on hard times and the work has stopped from them but I have enough reserves to carry me over this period. These are other things you need to consider.

 

[Cornish Steve]

You need to solve this problem for the longer term, not just in the short term. There will be times when you need to get a larger business loan, so prepare the ground now. Make sure that every financial transaction you make is recorded in the credit system. In other words, stop using cash and personal cheques.

We had to learn the lesson of 'credit ratings' when we moved to the US. In Britain, we had an unblemished record; in the US, we had no record - and that spelled trouble. Forget finding funds to start a business; we couldn't buy anything except with cash. But then we learned how to play the game.

1) In our case, we started out by buying furniture on credit and making regular monthly payments. The furniture store required a reference, and a secretary at my office did a fantastic job talking them into giving me credit. So, rather than buy something with cash, ask instead for credit terms. This gets you on the bottom rung of the ladder.

2) A few months later, the credit card offers started arriving. Just choose one with no monthly fee. The interest rate doesn't really matter because you should plan to pay off the total balance every month. This really helps you climb the second rung of the ladder.

3) Buy a car and get a car loan. More than anything else, this one really builds your credit rating. The key, of course, is to always pay on time. (I keep a record of all monthly due dates on my office whiteboard. Even if a bill doesn't arrive, I know when it's due and the amount I must pay.)

One more thing. Consider asking your bank manager to write a note about your excellent financial record over many years. Make copies of this note and send it to all the credit rating agencies (Equifax and so on). It can do no harm, and it might make a difference. (We had to do a similar thing about our British driving record in order to get car insurance in the US.) A letter may not be a record of regular credit card payments, but it's the next best thing.

Good luck. With your conservative financial habits, you should have a good credit rating in just a few months.

 

[Deleted member 42854]

We had the same problem - the answer is to go it alone for now (if you can), but start a couple of credit cards as soon as you have cashflow and PAY THE BILL EVERY MONTH, so that you are no more in debt than you have been, but you are developing a perfect credit history.

That may not matter now, but when you want to expand your bsuness, it will make all the difference when you apply for funding. Also, the same rules apply for grant applications (because you will probably have to match fund via a loan).

(These are the sort of Rules of the Game that no-one prepares you for, so I hope you are young enough to apply this knowledge several times! I also hope you help others learn this and other Rules!)

All the best, Dave Simon

 

[FRCOLLINS]

After months of planning and researching i was looking forward to launching my business within the next few weeks but the spanner in the works is that i'm short on start up costs by £800. I appreciate this is not a great deal of money is some areas of business but its causing me problems. I cannot start the ball rolling until i have covered all costs.

I have recently applied for two forms of credit which were declined, i have been informed that the applications were declined as i have no credit/debt such as loans or credit cards. They advised that my mobile phone contract/bank accounts/overdraft did not count towards the lending criteria. I feel i am being penalised for being sensible and maybe slightly old fashioned. If i couldnt afford something, i would save for it rather than pay on credit. Occasionally i dip into my overdraft but pay this back within a month or so depending on the amount.

I have been speaking to my bank who i have been with for over 20years to explain my issue and enquired about opening a business bank account with them alongside side an overdraft for £800. They advised my personal history would not be taken into consideration and it would be based on the credit report which would also be likely to be declined as i have no credit history.

I've been working all the overtime i can get and looking locally for opportunities to raise some more money, i've cut back on any additional expenses and saved every penny. I refuse to be defeated by £800 but feeling very disheartened. I could put back the launch by a few months to raise the money through working overtime with my current employer but i only want to postpone as a last resort!

I would be grateful for any advice? If anybody knows of any short term work/opportunities in the Glasgow/Central Scotland area then give me shout

I am assuming you have done all your sums and only require this 800 as a reserve fund and that you are launching your business to basically test the market you are targeting to find out if there is demand for the product or service you are going to sell, and if there is no demand then; closing it down again, in other wards a form of market research, this on the face of it could be a good enough idea.
But, to actually start a business any business on 800 and keep it running untill profitable even if all other set up costs are paid for, sounds a tall order! Good luck either way.

 

[oneLondon]

If you have been declined by your mainstream bank for funding please send me a message I would be interested in talking to you.

At Grater London Enterprise (GLE) oneLondon we provide funding for start ups and going concerns who have been refused lending by their banks; either for lack of credit or experience.

oneLondon does not credit score and we look at each case on its own merits.

Regards

 

[FRCOLLINS]

If you have been declined by your mainstream bank for funding please send me a message I would be interested in talking to you.

At Grater London Enterprise (GLE) oneLondon we provide funding for start ups and going concerns who have been refused lending by their banks; either for lack of credit or experience.

oneLondon does not credit score and we look at each case on its own merits.

Regards

Can you provide funding to companies outside London?

 

[oneLondon]

Unfortunately, we can only provide funding for SME's trading in london. If you approach your local enterprise centre i.e. business link they may be able to assist .

 

[fisicx]

My business is going to be a social website/online directory targetting photography. Its a niche marget but i'm hopeful it will provide me with enough income to give up the day job to then work on bigger projects.

It's not going to happen. These sort of sites just don't make any money unless you have a huge following. Any by huge I mean thousands of visitors a day. So unless you have some secret plan to market the site across the globe the chances of you picking up the required number of visitors is probably going to take years.

 

[Moocha]

Hi If you cant get the budget at present at least you can start the site. There is plenty of open source software out there that you can build your own site with, or you can just setup a blog on the hosting to start optimising the domain ready for when you do have the cash. Don't just sit and leave it though. In terms of financing the venture you can look at a business angel for help funding the venture but you will need a good business plan and solid idea to get any kind of financial backing. There are also local start up business grants that are available in many places around the country, so its worth checking with your local business support agency to find out what you are entitled to.