For a business what % would a bank lend

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MidlandsBase

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My Wife & I are proposing opening a cafe. My question is what % would a bank lend a business. We will have a detailed business plan, etc but finance at the moment is the issue.
 
The banks won't lend to you for a new business unless it is secured on property.

The cheapest form of finance is to remortgage your home. You will be able to borrow at 3%.

Brendan
 
Brendan said:
The banks won't lend to you for a new business unless it is secured on property.

The cheapest form of finance is to remortgage your home. You will be able to borrow at 3%.

Brendan
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Surely that will exclude everyone who is renting private accomodation and leasing a business premises? Will banks not accept a guarantor anymore?
 
Well I went to my bank manager and discussed the idea with him. He was very enthusiastic about the project and stated that about 25% would have to be funded by myself and my wife with the remaining 75% coming from the BOI. Whether I was a homeowner was not even mentioned.
 
Hi Midlands Base


That is very interesting. Maybe I am out of date with their lending policies. Are you not providing any security? What are you buying with the money? Is it assets or are they providing unsecured working capital?

Brendan
 
It's unsecured working capital. Now things are at an early stage so they may yet throw in some caveats to the deal so I'm not jumping up with excitement just yet but his view was that because we were putting in 25k of our money they would stump up the rest.
 
That is really interesting. Do keep us posted on it. It is the main complaint of people that the banks will not lend them money to start a business. Now they seem to be prepared to lend you money without security. Well done.


Brendan
 
Aib told me them you lend me 70% of the total purchase price of the business i would have to come up with the rest . What did you think i meant???
 
gordongekko said:
Aib told me them you lend me 70% of the total purchase price of the business i would have to come up with the rest . What did you think i meant???
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It wasn't clear that you were purchasing a business. Most of the rest of this thread was in the context of investment in existing businesses.
 
Aib told me them you lend me 70% of the total purchase price of the business i would have to come up with the rest . What did you think i meant???
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Hi Gordon

I still don't know what you mean? What are you purchasing? Real tangible assets such as property or machinery? Or goodwill?

Unless it's property backed, I am surprised that AIB will lend you 70%.

Brendan
 
Hi Gordon

You are buying a premises rather than a business. That makes it secured lending.

I do not expect that BoI or AIB will lend 70% of the cost of purchasing a business unless it is secured on property or guaranteed, or maybe if it's a small amount for a very good customer.

Brendan
 
I must be a good customer then as it was a small retail shop that was still trading included was the premises and fixtures and fitting goodwill etc everything except the stock, and they were prepared to lend me 70% in fact i felt they would have given me a bigger % if i needed it. As it turned out i was out bid in the end so i may never know how much they would have given me in the end.

gg
 
I have been in a similar position. The banks will not give you anything without security for that money. They are 'reluctant' to use your family home as security, but if you have no other assets, might accept it. Ask the bank about security early on and make no assumptions about it. They are very fidgety about new businesses.
 
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