Bank Loans - how easy to get?

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gc2006

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Hi all,

I have a question about getting a loan from a bank to finance a startup company. It's something I've had no real experience with - I've always been the employee instead of the owner.

I have experience in what I am going into, and have a good business plan done up. I have also undertaken some market research backing up the idea. While I can't get into the specifics - in essence I would be providing services / consultancy to Irish companies in my area of expertise.

The sort of money I'm looking for is quite small I think - the costs would cover purchase of equipment (home office, laptops), company set-up costs (biz cards, brochures, phones etc), and an amount of money to cover the starting phase when business would be slow to start.

I'm looking for people's experience with this sort of thing - how easy / hard is it to get money from banks for start-up companies?
 
Very easy, if you give a personal guarentee (assuming you're creditworthy, that is).

If you can't/won't do that, a bit more of an uphill battle, I'm afraid.

Basically, banks do not like lending to startup companies unless the loan is asset backed (e.g. loan used to buy premesis), or has someone guarenteeing it.
 
gc2006 said:
Hi all,

I have a question about getting a loan from a bank to finance a startup company. It's something I've had no real experience with - I've always been the employee instead of the owner.

I have experience in what I am going into, and have a good business plan done up. I have also undertaken some market research backing up the idea. While I can't get into the specifics - in essence I would be providing services / consultancy to Irish companies in my area of expertise.

The sort of money I'm looking for is quite small I think - the costs would cover purchase of equipment (home office, laptops), company set-up costs (biz cards, brochures, phones etc), and an amount of money to cover the starting phase when business would be slow to start.

I'm looking for people's experience with this sort of thing - how easy / hard is it to get money from banks for start-up companies?
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Would you consider obtaining a personal loan for the startup capital, especially if you don't need too much? Ulster Bank offer 5.8% fixed for Ufirst account holders upto 25k.
Ulster Bank have a dedicated business start-up package offering 5.95pc for all business loan amounts and loans up to €30,000 are available with no need for personal guarantees.
I am in no way affiliated with any Bank!
 
I think individual county councils offer grants to start up companies. Anybody know anymore about this?
 
whistler said:
I think individual county councils offer grants to start up companies. Anybody know anymore about this?
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You will find info in [broken link removed] about starting your own business and about grants from County Enterprise Boards.
 
Its easy, you might benefit from talking to your local enterprise board first tho.

When your talking so little money the bank will want to know you are willing to invest some of your own money in the venture. If you have zero down they won't want in, not cause its not a great business but because if you have no savings then chances are you havent the best financial self control. Also dont put in your plan that your going to take a wage... be satisfied that your going to create enough business to live off the profits.

Things that help:

Existing customers
Existing contracts
Letters of intent
Recommendations from your target market etc


Also you could try Vendor financing - if you can acquire a cusomter now then they might be willing to pay upfront to help you get started. This is more common than you think.
 
dublinsense said:
Things that help:

Existing customers
Existing contracts
Letters of intent
Recommendations from your target market etc


Also you could try Vendor financing - if you can acquire a cusomter now then they might be willing to pay upfront to help you get started. This is more common than you think.
Click to expand...

All of these imply a business that's already up-and-running.

I'd be interested to hear of anyone who's started a business on a non-asset backed or guarenteed loan.

To the OP: my advice would be to cut your startup costs to the absolute minimum, live off savings and only use borrowings against the list of "things that help" from dublinsense (you'll probably find that's about the only way you'll get it without personal guarentee).

The other option - friends and family - should only be considered if you're comfortable with the possibility that you may have to one day look them in the eye and say "I've lost all your money and I currently have no way of paying you back, nor can I see a way to do so for the forseeable future."
 
I had 40k saved, an existing business of the same nature as the one I wanted to borrow for, a good business plan and a guarantee and they rejected me twice because I wasn't with the bank long enough (and I think it had to do with my age at the time 23). I wanted another 40. I was with BOI, found it very hard to get anywhere.

ang1170 said:
All of these imply a business that's already up-and-running.

I'd be interested to hear of anyone who's started a business on a non-asset backed or guarenteed loan.

To the OP: my advice would be to cut your startup costs to the absolute minimum, live off savings and only use borrowings against the list of "things that help" from dublinsense (you'll probably find that's about the only way you'll get it without personal guarentee).

The other option - friends and family - should only be considered if you're comfortable with the possibility that you may have to one day look them in the eye and say "I've lost all your money and I currently have no way of paying you back, nor can I see a way to do so for the forseeable future."
Click to expand...
 
It all begin with ambitions and careful plan. Business ideas doesn't come in an instance. Its usually cultivated in the heart and mind. Actions does all the work. You would get up as early as everyday to get information up and ready. All then will put into a business plan. To start, do SME courses like How To Start Your Own Business, usually provided by your local Enterprise Board. If your idea is complete with all the necessary tools, chances are you'll have better chance in obtaining grants learning all the qualifying conditions. Along with your financial control capability, you'll go straight A's.

And Credit Union would loan you as well. Basically any banks, provided you can prove to them in transactions that you are able to save and control your financial. Usually banks would want to see your life circumstances with money e.g: Credit Card, Personal Loan, Lifestyle and etc. the lesser loans you have, the better chance is going to be.

I got mine without any personal guarantee from Credit Union and start by buying a small business lease and now I have larger establishment trading under a company.

Hope this help.
 
Although I'm not advocating that you do so......many start-ups are financed through Personal Loans, Car Loans or House Improvement Loans.

It is really, really important that you don't get knocked back on this, so approach your bank with a proposal and get the the response to the question.......what would be the likely outcome if I requested a Loan. Don't go for the Loan and not get it!

Given the nature of your business, you should be able to finance it yourself...also banks like to see you matching funds by investing something...a minimum of 25%.

Be careful about your need for Working Capital.....businesses might not be so willing to pay you as quickly as you hope/think..

Good Luck!
 
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