Startup business loans

Russinating · 17 Jul 2012 at 23:12

Has anyone here ever applied for or got a startup business loan? I can freely find general information about loans and even apply/get one online, but that all seems a little detached and basic.

Do I just go into a branch and book an appointment with someone? And at that meeting will I have to show my idea/presentation/business plan etc or just run over the basics (how much for how long) and then come back?

It's basically that process that I can't really find much information about or how to approach it. Has anyone got any experiences that they wouldn't mind sharing? Also, which banks should I go to?

If it makes a difference the loan would be under £25,000 (that seems quite a common below/above divider).

spoffle · 17 Jul 2012 at 23:21

I'm in this position myself.

cm1179 · 17 Jul 2012 at 23:24

go into your bank and ask for an appointment with a business advisor.

you will need a business plan that goes indepth and will need forecasts and figures (though don't think dragons den, pull them out the memory banks scenario, you'll have them all on paper, wont you?)

£25k? do you have any collateral?

(i'm sure you know this) but your best bet is to avoid a bank altogethor. can you raise the funds elsewhere?

[TW]Fox · 17 Jul 2012 at 23:24

It's bonkers-difficult to get this because the failure rate of new businesses is so high that there is considerable risk to banks of lending out £25k. You'll almost certainly need to demonstrate that you are prepared to put in a similar amount - so you'll often need to be able to match the funding the bank is being asked for. So, do you have £25k yourself to put together with the £25k you want? You'll be told to jog on if you've got 50 quid and you want them to put up 25 grand.

You may find it easier to apply for a personal loan instead.

LOAM · 17 Jul 2012 at 23:33

They amount to personal loans anyway as you have to give personal guarantee regardless. We gave up in the end as it was just to difficult even though we only needed a tiny amount.

Russinating · 17 Jul 2012 at 23:34

I don't need £25k, I just said that seems quite a common divider between loan types (ie under or over have different applications). I'm looking at about £15k, so £7.5k if matched.

Why would any startup apply for a business loan over a personal loan if the latter's easier? It seems like most of the rates or payment terms are no different.

Sherbs · 17 Jul 2012 at 23:36

Have you looked at kickstarter and the like ie crowdfunding?

Jambo · 17 Jul 2012 at 23:38

Russinating said:
I don't need £25k, I just said that seems quite a common divider between loan types (ie under or over have different applications). I'm looking at about £15k, so £7.5k if matched.

Why would any startup apply for a business loan over a personal loan if the latter's easier? It seems like most of the rates or payment terms are no different.

Because you are not allowed to use a personal loan for business. People do though, I did.

Russinating · 17 Jul 2012 at 23:38

Kickstarter doesn't apply as it's not creative/hairy fairy/an Apple accessory. What's the "alike"?

I've looked at Zopa but see no advantage over a normal loan.

Kemik · 17 Jul 2012 at 23:40

Russinating said:
I don't need £25k, I just said that seems quite a common divider between loan types (ie under or over have different applications). I'm looking at about £15k, so £7.5k if matched.

Why would any startup apply for a business loan over a personal loan if the latter's easier? It seems like most of the rates or payment terms are no different.

They hope the business loan won't require a personal guarantee, in which case only the company is liable for the loan, not the individual owner.

Russinating · 17 Jul 2012 at 23:43

As Fox said, I'm guessing that's impossible unless you're a trading company and are financing cashflow/invoices or similar. I certainly wouldn't do that if I was the bank anyway!

Going back to the meeting, do they just expect some print outs of numbers etc and for me to explain the idea or to take a laptop with a presentation explaining the idea/market etc, a la a bit more Dragon's Den?

cm1179 · 17 Jul 2012 at 23:46

Russinating said:
I don't need £25k, I just said that seems quite a common divider between loan types (ie under or over have different applications). I'm looking at about £15k, so £7.5k if matched.

Why would any startup apply for a business loan over a personal loan if the latter's easier? It seems like most of the rates or payment terms are no different.

what credit card limit do you have?

to help with cashflow (which will ultimately kill you if you don't plan it right) you may consider maxing your cc with supplies and then taking advantage of barclaycard's 0% on transfers for 22 months they are offering on some cards. just a thought.

Yamahahahahaha · 17 Jul 2012 at 23:54

Russinating said:
As Fox said, I'm guessing that's impossible unless you're a trading company and are financing cashflow/invoices or similar. I certainly wouldn't do that if I was the bank anyway!

Definitely.

Cashflow is king. If you don't have anything at the moment, take out a personal loan or find a willing relative. Get everything in writing.

daz · 18 Jul 2012 at 00:09

Just get a personal loan for that amount of money. Use credit cards as well to ease cash flow (but absolutely not for long term borrowing - unless you're getting a very good 0% deal or have a very good deal on purchases).

Jambo · 18 Jul 2012 at 00:11

Russinating said:
As Fox said, I'm guessing that's impossible unless you're a trading company and are financing cashflow/invoices or similar. I certainly wouldn't do that if I was the bank anyway!

Going back to the meeting, do they just expect some print outs of numbers etc and for me to explain the idea or to take a laptop with a presentation explaining the idea/market etc, a la a bit more Dragon's Den?

Just a business plan and cashflow projections.

You probably won't get it if it's a startup though, banks aren't lending to small businesses.

Freakbro · 18 Jul 2012 at 05:18

Try Lloyds, they seem pretty relaxed on extending up to £25k credit to business, have recently sorted this for a friends business. Make an appointment with their business advisor and take your business plan and some figures.

D.P. · 18 Jul 2012 at 06:48

Rather than a loan try and find investors, venture capitalists, entrepenure organizations.

Several collegeues hae been awarded a hundreds of thousands ( and even over a million) by applying to the right organizations, charities and investors. Your ex University is a grelat place to start. Mine hands out 50k like one gives a tip to a hot waitress, given a half reasonable pan and innovation.

Now my collegeues all have products developed as off shoots of their PhD and are high tech software or hardware products, with some amounts of patents and IP. There is a surprising amount of money out there, you just have to spread your bets and apply for everything.

Russinating · 18 Jul 2012 at 09:37

Freakbro said:
Try Lloyds, they seem pretty relaxed on extending up to £25k credit to business, have recently sorted this for a friends business. Make an appointment with their business advisor and take your business plan and some figures.

Will do, I bank with them anyway.

D.P. said:
Rather than a loan try and find investors, venture capitalists, entrepenure organizations.

Several collegeues hae been awarded a hundreds of thousands ( and even over a million) by applying to the right organizations, charities and investors. Your ex University is a grelat place to start. Mine hands out 50k like one gives a tip to a hot waitress, given a half reasonable pan and innovation.

Any idea how to find said investors, venture capitalists and bursary orgs? And don't even go there with my university, they're useless.

toshj · 18 Jul 2012 at 09:51

Russinating said:
Will do, I bank with them anyway.

Any idea how to find said investors, venture capitalists and bursary orgs? And don't even go there with my university, they're useless.

Bank-wise it's still possible. A friend of mine managed to obtain a £25,000 loan from one of the high street names for a cafe he wants to set up in London - ironically I imagine this is probably the easiest way for a human being to lose money! He went to them with a thorough and sounds business plan, huge amounts of research and wouldn't allow them to refure him the money. He'd spoken to probably 2-30 cafe owners in North, South and East London to find out the nuances of obtain these kind of loans, and then put together a perfect pitch. Seriosuly though, the research and development of the business plan was pretty much a full time job for about 3-4 months.

On the Investor/Private Equity front, you just need to read and research. Find out which firms have a tendency to invest in the specific area you're looking to set up businesses in. Also, try to get friendly with as many similar companies as possible and ask for advice for setting up.

daz · 18 Jul 2012 at 15:18

toshj said:
Bank-wise it's still possible. A friend of mine managed to obtain a £25,000 loan from one of the high street names for a cafe he wants to set up in London

25k is the maximum loan amount you're allowed unsecured, so as long as you don't have adverse credit and can afford the repayments then getting approved for anything up to that amount isn't going to be a problem.