View Full Version : Finance realistic

02-04-2005, 09:26 PM
Hi everyone! I'm wondering if anyone who deals with loans could give me an idea of how realistic my figures are in terms people taking me serious and lending me money.

First off Im 22 and havn't wrote a full business plan yet only half! which is why I havnt approached any banks yet!

I need 25,000 for the business for the first year to survive with cash flow etc.. I hope to put 6,000 of my own money in and borrow 19,000 from the banks.

The money will be used to purchase a website, working capital and hold around 15,000 tangible stock items which will be built up throughout the year!

If I have a sound business plan which I believe I have, are banks happy to lend this amount of money if personal circumstances are right eg. good credit rating.

I understand I can apply for the 75% loan guarentee from the government and show them that but the business plan is the main thing first.

I have worked at a internet mail order company for a while which is what my business is based around without giving too much away! The company I work for turns over 450,000 per year and seems to be doing very well. I believe I can setup on my own and do something similar but need the finance. I have a business degree which I hope will help my application.

I believe my age may be a problem only 22 even tho I have a good business plan is this true???

Hope people can help


02-04-2005, 10:26 PM
If you have a strong business plan with a good cash flow forecast and break even chart set at the very least you should not be afraid to approach the banks. Many businesses find it difficult to gain finance from banks but if you do get turned by one there is no reason why you cannot get the go ahead from another. Just keep trying and present yourself well.

06-04-2005, 12:03 PM
Sometimes age is not necessariy the issue. In my opinion experience and commitment is extremely helpful if you wish to sound credible to a lender, especially if you are seeking an unsecured lend.

Despite your fears about age, in our industry age if often not an issue so therefore I would say that the type of finance you require may be more of a factor in how far a lender will go.

Often you will come across the idea of matched funding, and this is where most people at a young age fall down. If a bank wants you to put up a proportion of the lend yourself (e.g, 50%) then most young people struggle with this as they haven't had the time to obtain that level of savings/equity.

Without knowing how your business will operate (and the way in which it will do business etc.) and therefore get off the ground, it's very difficult to say.

I agree with RSL, cashflow forecasts are often the most objective way of demonstrating what the cash injection is used for, and also to show the ability of the company to repay. They also show the extent to which a person has thought through their idea, e.g, bad cashflows are easy to spot and 'blow holes in', whilst good ones are objective and realistic, and therefore generate much more credibility.

Hope I've been of some help!

13-04-2005, 10:04 AM
Hi thanks for both the replies its gives me a better idea of what I need to do.

Im glad that people dont take you age too seriously as I think that if I was older, I would be doing just the same thing as I want to do now but maybe I would of worked in a job for 5 years more.

This wouldnt have really changed the way I think about the business and the job may not of even been related to the business.

I have hopefully come up with near 50% of the money from sources, getting the general feel from people that this is what banks are happy with (if your cashflow and repayment ideas like you said are good.)


03-05-2005, 06:55 PM
on the good side you have worked in the business. on the bad you are 22 (as far as banks think). on the good you have 6,000 plus on the bad you need loads of stock.
right firstly do you need all this stock at once?
Having Stock sounds good but in reality it means money tied up and useless. 0 stock is company heaven
can you order it all now but "draw it down" from suppliers over a year?
it is very important to get the supply chain working for you.
buy smaller quants while you build up.
try and get your suppliers to help you get on your feet.
they are more likely to play ball if you offer to pay upfront for a smaller order than asking for credit on loads of stock.
as any supplier will tell you offering credit and trying to get paid is far worse than a small guy who wants less but pays his bills and might grow.
this bit might sound a bit odd but think about it. it is rather difficult to give advice without knowing all the details: sometimes it is a good idea to just buy your core products in advance and sell the periferal stock (the stuff you need to stock to look professional but never really sell enough to make the stockpile worth while) at no profit even if you have to nip out to a shop and get one and sell it on. This way you discover the business without finding a huge pile of goods filling up your store at the end of a year.
good luck

08-05-2005, 02:08 PM
Hi, I find this quite interesting.

Will the business degree help bsnmcahi get a loan? or is this irrelevant.

08-05-2005, 04:36 PM
i am not a fan of degrees for the entrepreneur. they tend to spend too much time on team dynamics and structual stuff. As a whole these sort of things are help big companies and consultant firms. I would suggest a book keeping or a basic accounts evening classes and a few good books. A course in salesmanship would also be extremely usefull but try something small scale and normal rather than the brash "think yourself into a millionaire" type. Read lots but most books have one gem of an idea and then pad it out for a few hundred pages. even the Dummies set of business books are worth a read. but take notes as it is too easy to flit about taking nothing in.