Business Loan??

hbrad92 · Feb 17, 2014

Ive recently qualified and have now attempted my own small business. As many of you may be aware its pretty difficult getting the ball rolling, especially when you dont have much money.

There are a number of things I require to make my life a lot easier. These include buying a van, advertising, materials, tools and many more. A few people have suggested to me about getting a business loan. My eyes lit up at the thought of having a good 10 grand to fire into my business but the harsh reality soon kicked in that my current credit rating is at an all time low. I have 2 credit cards, am constantly in my overdraft, bills bouncing left right and centre, the lot! I am not a home owner either and most definitely would not qualify for any form of loan or mortgage. Also being self employed obviously doesnt make things look any better to lenders.

After explaining all this to a friend of mine (who knows a fair bit about loans etc I assume), he told me that lenders wouldnt care about any of these factors? This surely cannot be true.

Any help, truths or opinions would be much appreciated. Apart from the nasty ones. Thank you.

MDJ · Feb 17, 2014

When I started I had exactly 1000 in the business account and a agreed overdraft of 10k with the bank, I bough a tatty old van for 500 quid and kept things very tight, you may be able to do what I did, providing you get some turnover in the bank account regardless of whether your overdrawn or not and you keep within the overdraft agreed amount the Bank won't give a damn. My advice to you for what it is worth is to only take the minimum amount of money you need regarding wages at all times until you start to make money, also do not go out and buy a new van with posh sign writing all over it, you may look good at the wholesalers but you will be in debt before you get going, the very best of luck to you.

GLENNSPARK · Feb 17, 2014

in no uncertain circumstances do you start down the road of `loans` etc...

despite what the likes of Wonga and others would have you believe you dont need loans to get started.

a way forward would be to set up a tradeUK account (you can get the forms at screwfix counters)..and you get 60 days to pay.

when it comes to vans theres a way here as well:

cheap van in Cars, Motorcycles & Vehicles | eBay

SPARTYKUS · Feb 17, 2014

If you can work it, you can have the materials, fit them and get the wedge for them, and be 6-8 weeks off from paying for them. If you repeat that then you arethe right way round with the money (you've got it, and owe it to someone else instead of the usual way)

Andystraughan · Feb 17, 2014

Have you calculated how much it would take to start up?

Napit/elecsa registration fee
bs7671 regulations
multi function tester which is calibrated. (metrel is cheapest and ok I've heard)
van or car for starting up. I used my car for a year
advertising. A thousand hand made flyers did me wonders
insurance
Test sheet booklets/software
money in the bank to fall back on
tools drills which are no longer provided

getting a loan for 10k is overkill. 2 rewires and you can make your money back. Well 3 lol

good luck all the best

pjcomp · Feb 17, 2014

After explaining all this to a friend of mine (who knows a fair bit about loans etc I assume), he told me that lenders wouldnt care about any of these factors? This surely cannot be true.

Instead of asking friends, have you tried asking the people who actually lend the money? Go down the bank and have a chat with someone there, they'll be able to tell you the truth, not what someone down the pub "thinks". Look for a local business organisation - Federation of Small Businesses, chamber of commerce, that sort of thing - and you'll be able to get free advice and probably an intro to someone who can provide active help.

pj

Octopus · Feb 17, 2014

Start up costs for the first year are min £6K, some of which are incurred immediately, and some over the year.

You need to get a grip on what the costs are to see if SE is viable.

For most people going SE the aim should be to break even in the first year - so if you have bills to pay then going SE may not be the best route for you.

If you do then you need to register with HMRC, and start saving for your tax bill and make sure you pay your class 2 NI's and save for your class 4 NI.

Living hand to mouth will be difficult. but as others have said you may get a credit account with a wholesaler - and if you do use it wisely - i.e. don't buy kit on the last day of the month, if its not needed until the 1st!!