private investment and return/profit - without selling your business

Thanks for the reply,

   Yes its a loan we are after from private investors with a 10% return paid monthly to them and the return of their investment after 1 year paid in a lump sum. We can give personal guarantees on their return as we feel we have a solid business and can strengthen the business plan further. Would this appeal to the private investor and how would i go about looking for or advertising our needs to potential private investors without selling equity.

   We are a group of companies setup in different sectors so we feel we have a strong position in the market. Our worst case scenario would be that we would offer equity is things do slide which is highly unlikely.

  How would i go about things? Any advice and comments.

Thanks

I think the bank would be closer to 8% than 3-5% and they will want personal guarantees for this.  As it is a fairly low level investment, would a bank overdraft be more appropriate?

Inca101

I agree with the above point regarding a bank overdraft.

If you take a loan from a bank they won't want part of your business. They will just want a guarantee you can or will pay it back.

If you want a loan from a private investor chances are they WILL want part of your business as security or equity against the cash they inject into your company.

An overdraft has to be the best way in my opinion. If your company is as strong and stable and has as much potential as you say then you will be out of the overdraft relatively soon and won't have any other intresest or loan terms to worry about.

Clem.

Hi,

   Thanks for the replies, I think a bank overdraft sounds like a better option but its just a matter of getting accepted for the overdraft. How large can an overdraft be? I would like to raise capital fast but dont want to get bugged down by banks not accepting you, charges, alot of paper work etc etc... Whereas a private investor may be kind enough to give you the money and wait for his/her interest payments and get a good return on their investment.

   If you can convince a private individual to invest dont you think this will be cheaper than the banks or any other form?

Thanks

You are asking for £10K, which if you find an investor you have. Guaranteed you have the £10K but what does the investor have? Nothing! A promise by you means absolutely nothing. 10% is not a high amount on an investement like that, particularly over 1 year with that risk. A business needs skill, insight, customers and cash. If you have the skill, insight (knowledge) and customers perhaps you need a partner to bring in the rest of what you need.
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I think you can have in the region of 15K, from this deduct the credit limit of the company credit card, then I think this is your limit.  Each bank varies and have their own ratio.  They will want guarantees however but then so will anyone else.

Another source of very cheap finance is family.  Often they are quite happy to help to get you out from under their feet.

10% retturn is low for a private investor.

Hi,

   Thanks for the replies.  How would we go about offering our investment? How about 20% return per annum sound, would this attract potential investors? We have funds invested else where to protect investors, so that if anything goes wrong we would back it up with our investments. 

Any advice appreciated

Thanks

Hi,

You mentioned previously about providing a personal guarantee for the loan. If the guarantee is in the form of property then you can take a "second-charge" (the first charge loan being your mortgage) loan which would cost you about 8-12% per annum depending on your credit history. If you want a no obligation quote then visit our affiliate site www.choice-finance.co.uk. The loan proceeds can be used for any legitimate purpose, including business development.

However if your guarantee is not backed-up by tangible assets then an investor would look for a return in excess of 30% per annum as you operate in a high-risk industry.

Hope this helps,

Joel

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Thanks.