alex_riddell started this topic @ 20:03 on 01/04/2007
I need a bank loan to start my business, Probably of about £30,000-£40,000. The thing is i dont have any of my own money to put in, is it still worth trying to get a bank loan or would they not even consider lending to me?
Thanks for any advice you can offer!
Alex
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RE: bank loan question
Ian J | 02/04/2007 07:53 AM
If you have no security as well as cash I doubt whether thether you will find it easy to raise money from banks.
The Small Firms Loan Guarantee was introduced to cover just that eventuality but you need to have an excellent idea and watertight business plan before the banks would put your proposal forward.
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Ian
Factoring ,
Invoice Discounting ,
Trade Finance and
Asset Finance specialist broker.
Founder member of
Independent Factoring Brokers Association
RE: RE: bank loan question
Cat Ryan | 02/04/2007 02:51 PM
Funding your business when you have no cash of your own is tricky. The scheme Ian mentions is really good, but like he says is does take some work to sort it out (and to convince the banks that it exists in the first place can be amazingly hard).
The other thing you can do is to raise some equity investment - basically sell some shares in your new limited company. If you find a good investor then you have won not just cash to get started but some good advice as well (they are likely to take on a form of a mentoring role as they will be wanting to look after their investment). Plus you wouldn't be paying the money back as such until the company can pay dividends or it is time to sell the company. If you raise half of what you need as investment, then you can ask the banks for the other half as a loan. The banks are generally ok with lending 50% if you (or your investors) put in the other half, and they should be able to do so under the loan guarantee scheme above.
The other thing to consider is if you can get any free money (grants) or cheap loans (normally only available if you are young) from places like the Princes Trust.
There is an excellent book called How to Fund your Business by Steve Parks which goes through all the various funding options for startups in the UK.
Best of luck, Catherine
