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Right at this moment in time I hate all banks & financial organisations - I MAY not change my mind

(37 Posts)
KatyMac Sat 12-Jul-08 21:20:45

A few months ago I was borrowing £180K to start my business based on a sound business plan & I had 3 firm offers

My plans changed slightly & I only needed to borrow £50K & all of a sudden I cannot borrow anything

So that's that - it's all over sad

whatdayisit Sat 12-Jul-08 21:25:10

Really KatyMac? I work in commercial banking (please don't hate me) and whilst it is certainly true that we are finding it harder to lend and have been forced to put up pricing etc, I can't think of a business I would have been happy to lend £180k to 3 months ago, that I wouldn't lend £50k to now. Has something else changed too?

KatyMac Sat 12-Jul-08 21:28:31

Not really

I have a better site - I want to borrow less money

The income/expenses are the same - the set-up costs have dropped

Apparently it is due to the 'current economic climate'

lulumama Sat 12-Jul-08 21:30:29

sorry to hear that.

whatdayisit Sat 12-Jul-08 21:33:22

Do you want to give me some details?

Which banks have you been talking to? Did you have an offer letter? If so, when is it dated?

What is your business? What turnover are you forecasting? (trying to work out what type of department you have been dealing with)

What is the £50k for? Over what term do you want to borrow it? What happened for the set-up costs to fall so much?

And this is probably the crunch question - how was the loan to be secured?

KatyMac Sat 12-Jul-08 21:39:21

That is the crunch tbh - security

We are to be a co-op
Turnover about £168 - if we get 2/3rds full
Business plan both times) didn't forecast that until year 3
Had a building that needed extensive refurbishment - but it fell through - so now have one with needs less refurbishment (& is in a better position tbh)
Both buildings were on 25yr lease
Wanted to borrow over 20 yrs (previously 25)

Offer letter dated last September

TBH it is probably for the best as there are lots of other difficulties but I am struggling with the situation

whatdayisit Sat 12-Jul-08 21:48:14

Yes. I deal with larger businesses , but would find it difficult to lend £50k to a start-up business with no security (25 year lease doesn't count)

Was the £180k also unsecured? - that would still have seemed like a big ask in Sept TBH.

Have you had a look at the Small Firms Loan G'tee scheme? I will try and find some info.

whatdayisit Sat 12-Jul-08 21:49:25

sflgs

KatyMac Sat 12-Jul-08 21:51:55

That was what I was doing

whatdayisit Sat 12-Jul-08 22:00:52

Sorry Katy, then I'm out of ideas. As I said, i don;t deal with small businesses (under £2m t/o) but I really can't see why a business that was apporved for a £180k SFLGS loan in Sep wouldn't get £50k now, all other things being equal, so I share your frustration.

Is the security issue that you don't have any to offer, or that you don't have anything you're prepared to offer? I think under the terms of the scheme the DTI g'tee has to be last resort, so the bank is obliged to take a charge over your assets (usually house if you are a homeowner)

If you're thinking there are other reasons not to go ahead now, then maybe leave it for a while and try again.

What was the Co-op doing? ie is it something treatened more than most by a looming recession?

KatyMac Sat 12-Jul-08 22:15:27

Don't have any money in the house anymore

I think I have to leave it

4 nurseries have closed/are closing this term round here - it does not look good tbh

whatdayisit Sat 12-Jul-08 22:20:30

I have to agree, starting any new business is always a big risk and more than ever now. I have seen more files go to recoveries (debt collection) in the last 6 months than in the last 6 years put together.

Good luck for whatever you decide to do.

KatyMac Sat 12-Jul-08 22:22:51

Sorry Lulumama - meant to say Thanks

Whatdayisit - Thanks - I guess I am just coming to terms with it

bobbysmum07 Sat 12-Jul-08 23:06:48

Why do you need the 50k? Is it for renovations on the building? If so, can't you negotiate something with the landlord?

Does the building definitely need renovating? If not, can't you work around what's there? Everyone has an idea of something perfect in their head, but sometimes you just have to make the best of what you can.

Maybe there's another way ...

KatyMac Sun 13-Jul-08 12:11:54

No water, no toilets, no electric, no floor, no kitchen

Windows condemned, grounds not secure

SueW Sun 13-Jul-08 12:22:50

With what you say about the local nurseries closing, it doesn't sound like it is a good time to be setting up a new one. Presumably your local business managers are familiar with what is happening locally, how the business climate has changed and that has made them reluctant.

IIRC wasn't your father getting involved and you borrowing against your house as well as looking for investment from ?business angels?

If you really feel you can make a go-er of a nursery where others can't, why don't you buy one of the existing businesses?

KatyMac Sun 13-Jul-08 12:28:45

No - we had worked a deal with the bank (tho' it took a long time & we had looked at all those)

I agree now is not the right time to do this

SueW Sun 13-Jul-08 13:23:15

Then really you don't hate them because actually they are doing you a favour - they aren't allowing you to get yourself into a potentially money-losing situation!

But I can understand your feeling sore about not being able to realise your dream at the moment.

I am equally frustrated because a friend and I have been discussing a business start-up for almost a year but there is no way I am putting our family home on the line to buy a business property in this market and local rental properties are ridiculously expensive.

I think the frustration should be aimed at testosterone-fuelled market influencers and media desperate to talk us into recession though. They are doing their best to bring down the entire British banking system, it sometimes feels (I have shares in a UK bank which are now worth less than a third of what they were at their highest point).

KatyMac Sun 13-Jul-08 13:31:48

Logic hmm that's not fair

noddyholder Sun 13-Jul-08 14:00:33

Why do people think we can be talked into a recession?That is just not possible A recession is a natural part of the economis cycle esp after a big bubble.If things were good no amount of talk could influence what is about to happen.

bobbysmum07 Sun 13-Jul-08 17:17:26

Why don't you buy or set up a nursery somewhere else? It doesn't have to be where you live - you can always employ someone to run it.

There's no way I'd even consider leasing a building that needed the amount of work you've described. I doubt whether 50 grand would even be enough.

If I were you, I'd look to buy an existing business. Maybe a preschool - there's enough of them on the market now for next to nothing. Of course, they're closing because of the 'free' places they have to offer, which has made them unsustainable. But you could always say sod the grant, I'm not offering it and charge what you want. You'd still get kids - provided you were in the right place. Or you could just take 2 year olds.

It took me five years to open my frst nursery. Don't give up.

KatyMac Sun 13-Jul-08 18:25:47

There (appear) to be 2/3 on the market in Norfolk

At around £500K - according to Daltons & 'Businesses for sale'

I do keep a look out

bobbysmum07 Sun 13-Jul-08 18:49:28

I've seen preschools for sale for as little as 20K. They might only have the use of a church hall, but places like that can be made to work (not if you only take funded 3 year olds, obviously).

KatyMac Sun 13-Jul-08 19:10:15

Wow!!

bobbysmum07 Sun 13-Jul-08 19:41:37

Have a look at businessesforsale.com. There's a nursery school for sale in Birmingham for 10 grand, and quite a few more in the 30-70K price range.

Go for something already up and running and you have a guaranteed income from day 1. Might take a while to build it up, but far easier than starting from scratch.

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