Singing Pig

If I hear those words again I will scream!  I am looking for a £250k business loan and the banks are just clamming up at the moment.  My accountants at a mid size national firm who network with most banks think some of them are so risk adverse they will only lend if you can prove you dont need the money.  Anyone else finding the same?

I have a great startup happening at the moment.  I have just left my £120k pa corporate job to build something of value.  I am putting in £120k of my own cash, and am prepared to use the £400k of equity in my house as personal security.  I have hired a great management team with industry experience.  I have clients waiting to buy from me once my government registrations are in place.

It's a service business that I need to expand very aggressively over the next 2 years so as to be an attractive trade target once the corporate players adjust their thinking about the changing market.

So, I am left thinking about having to sell the house in a weak property market, or - horror- release equity to a business angel.  i hate the idea about releasing equity at start-up stage when it will be worth so much more in even 2 years.  Does anyone have any other ideas on raising debt finance as opposed to equity finance?  Even a 2 year equity with buy-back clauses might be attractive. 

I took some small comfortaas I was reading books by both Felix Dennis and Duncan Bannatyne about their simliar experiences with banks - as bannatyne says "if they had a clue about business they would be writing the book instead of him"

Any ideas folks?

David,

I can understand your frustrations and you are not alone in this. It is difficult to give you advice without knowing more about your start up idea. You can visit my company's web site (www.babylonbusinessfinance.com) to get some general ideas on types of debt financial products.

If you can send me a copy of your business plan then I will be able to give you a much more informed opinion.

Best wishes,

Interesting to note from the site that you are now working with AIB - I have a meeting with them in a week's time. 

My experience of RBS who have specialist teams in the health and social care sector was not good..... We love your idea, we love your business model, we love the team you have hired, I see your USPs........NO. 

The accounts at JB Wilkins Kennedy tell me dont even bother with HBOS as they wont lend anyone at the moment.

I am just amazed because I will personally wear the risk - it would take a 20% + drop in the housing market before my equity would not cover the business loan - thats IF my business also doesnt work.

Hi David,

Could you not remortgage your house and use some of that equity for the business?

Regards

 Jai
 

Unfortunately, I doubt it.

House value = £840k, existing mortage £440k

Any remortgage will be a big one to service, and at the moment I am at the start of the period of self-employment where banks want to see 3 years of accounts etc.

David have you thought of maybe involving private investor in return for a % of your company if you find it difficult of raising finance through conventional channels...

dewatt:

Unfortunately, I doubt it.

House value = £840k, existing mortage £440k

Any remortgage will be a big one to service, and at the moment I am at the start of the period of self-employment where banks want to see 3 years of accounts etc.

True, there are lenders that dont require accounts though. It's simply a cost of weighing up cost of borrowing 250k as a business loan or taking on a bigger mortgage. Just suggesting it as an option.

Regards

Jai
 

David,

Sounds like you're 90% there and you're doing all the right things, all I can say is "What ever it takes". If you're determined not to give up equity and dept is the only way. Cover your balls and hold on to your hat!

lawless

Can you start taking deposits from your customers to "secure their bookings". Ask for credit with suppliers?