Really complicated situation for Katymac's Sustainable Nursery

[Katymac]

Excuse my lack of proper punctuation....MN has corrupted all my apostrophies

The situation thus far

I have raised about 130K towards opening the nursery - basically I have remortgaged and sold my soul to several devils to do this and its not enough.

The architect and I recon we need about 150-180K to do it

I have been put in touch with a man (I guess he is a fixer) who can refinance it all without my house being on the line - it would be a longer pay back and there is a very large fee involved. I would get a lot of very hands on consultancy and support (legal/accountancy/HR etc)

I have some issues/problmes with it all - but it does seem to be a reasonable deal.

Deal as I see it;

I have too:
a)Pay XXX initially after contracts signed
b)Pay up to YYY each 4/5 weeks for an unspecified length of time
c)Pay expenses ? no idea of how much
d)Do everything they say

They have to
a)Provide advice
b)Arrange grants/loans totalling 180,000
c)Ensure that Walnut Corner gets up & running

OK stuff I am concerned about

1. What if the loans they arrange are so high interest I cant afford them
2. What if after they look through my paperwork etc they decide the nursery cant make any money
3. What if the person leasing me the barn doesnt want to do what they want ? I dont want him to be pressured
4. What if we have a disagreement about something integral to the concept, something I feel morally about that will cost more but that I cant (emotionally) lose

Can you lot think of anything I havent thought of or have any views on the deal??

Of course if I don't go with them I might never get it done

what about the local chamber of commerce

princes trust

other organisations who lend money to fund private enterprises

I'm too old for Princes Trust

I didn't know my Chamber of Commerce did loans/grants

Business Link & NWES noth say I'm not eligible for any grants & my bank won't lend me any more

You could copy and paste the post onto UKBF too - there maybe someone on there with experience/advice.

chamber can put you intouch with financing options as you have raise majority of money
It sounds like a strange deal with this company will they have shares in your company
will it be Ltd if so how many shares

if you are doing what they say how much of the risk are they prepared to take?

are they classed as partners

i would say that as you are leasing the building rather than buying it then you are on shaky ground doing this deal with this fixer man. like you say what if the owners won't do or agree with what fixer man wants. think down the line, in a few years time..

That's interesting Sniff - I will phone the chamber of Commerce tomorrow

My lease will be for 25yrs - that bit is sorted (I hope)

I feel very worried about the whole project atm

But then I do have fairly regular and predictable wobbles

You may not get grants from Business Link but (as an ex employee of theirs) you will get the business advice, consultancy, access to legal helpline, access to people who can help you source loans WITHOUT some shark taking a big fee.
If the bank won't lend you any more, then maybe you should listen to them, they are trying to help YOU. This other person won't care if you go under trying to pay back big amounts, as he will have had his fee and scarpered.
SO the nursery is going to cost around £300k set up plus running costs/wages/interest on sums borrowed etc? Have you done sums to see how much you would have to charge per day to be able to pay back that much plus wages for staff and salary for yourself? If the daily rate is high then you may not get any customers and your business is a goner.
Have you gone through any business plans with your local Business Link? Thats what they are there for.

Sorry to be a bit negative but at Business Link we used to get people through the door with no idea of the cost to their business of paying back massive finance.

Sorry I think I misunderstood - is that £180k in total, or £180 plus the £130 already remortgaged?
If you need another £20k then firstly have discussions with the architect to see what can be changed/downsized to get the nursery in within budget.
Also, if the place is on a 25 year lease and you are pouring all this money into it, what happens when the lease is up? You've improved someone elses property and will have no claim on it. It would make selling the business for a decent price difficult later on if there is a shortish lease left.
Lastly, business leases are complicated documents, you must have full written permission from the leaseholder before going ahead with anything that money lenders may want you to do - if you break the terms of the lease then you could end up with nothing and still owing a lot of money.

no -it's about 180 in all

I know it's not ideal to convert a property I don't own - but it is my only way to get started - I can't afford to buy & convert

But in 5-8 yrs I will be able to borrow against that business to buy my next one (hopefully)

Also in 25yrs I will be 64 & ready to retire (I hope)

NWES have been fab & done loads to help me - maybe it's just the chap I got from Business link - but he was very supportive - just not able to find any grants or funding - he didn't even know about the small business guarentee scheme

Both Business link, Natwest, my accountant & NWES have helped with my business plan & they all think it stands up

In order to rent what I'd need round here would be 1800-2400 pcm

I anticipate paying abround 600-900 pcm

Which over 25yrs is a saving of around £250K - that would allow for the loss when the nursery closes

After 25yrs the lease is able to be renegociated

The key question for me is whether you can afford to lose the initial fee that you're going to pay. Being locked into a deal without firstly knowing the terms of that deal doesn't sound good to be honest. Looking at your OP what do the YYY amounts under b represent?

Ex Banker here.

''I have too:
a)Pay XXX initially after contracts signed
b)Pay up to YYY each 4/5 weeks for an unspecified length of time
c)Pay expenses ? no idea of how much
d)Do everything they say ''

All sends up huge red flags to me. You would be (contractually) signing your life away.

As a current business owner, the last point of 'do everything they say' makes me extremely dubious.

Downsize your project, reduce your finish spec, save the money elsewhere.

Yes that's the bit that concerns me too - mind you I might have written that in a negative way - there is no point paying for advice & not following it tho' is there?

I am right at the edge anyway there isn't anything I can cut on

I'm not sure if my control freakyness is slanting a view of this

So you're locked into paying a set amount for management advice each month regardless of whether you want it or not?

Have you been able to speak to any other clients of this fixer?

2 & they both swear by them

The website looks a bit...empty imo - but it could just be new

I spoke to this chap on Friday & he told me he was very expensive and that I needed to go away & think about whether on not he is a conman

The bank is leanding me on my house (I have a mortgage of £100, the house is worth 160 & they will lend me 62 - 28 secured & 32 unsecured)

Katy, speaking as the partner of a builder, if you are at the edge anyway regarding borrowings etc, then you should think very carefully before going ahead. Every single building project ends up costing more, especially conversions of older buildings as you have no idea what may turn up.
Aren't you running a childminding business from home at the mo? Why not see how this works out for a couple of years, if you have made a fantastic go of it the bank may be willing to lend larger amounts. Also, will you be able to juggle the existing business AND project managing the building works without it being detrimental to your existing business?

Build cost is about 130 set up about 20

Which is why we need 180 - I am hoping that gives me enough leeway

Architect is project managing (fortunatley)

I think that's kinda what I was saying with my number 4

There is some stuff I can't compromise on

Someone (on another forum)just said this
"Katy ask yourself one thing ... are you willing to take orders from someone else to do what is your business and your idea?"

Don't know about large companies - I'll have a think

Why don't you just give up, it is obviously not viable without signing your life and your families securtity away.

ARE you running a childminding business Katymac?
Work hard at that, save up, show the bank that you are a good risk in the childcare area, THEN go back and do this nursery thing when you have proved yourself.