I suppose it is good news that we are continuing to receive business finance enquiries for new start businesses. The most recent one of which is for a £40,000 LCD exhibition screen. The discussion with the directors prompted me to remind oneself of the process required for funding a new business with very little trading history.
Many businesses that we see that have been trading for less than twelve months have had various experiences with the high street banks. In our experience inexperienced account mangers get the customers jumping through hoops promising that the bank will do the deal only to be overruled when the deal goes for credit approval. In our experience it doesn’t matter how good the business plans are unless three years decent trading figures can be produced then it is unlikely that the banks will help.
The good news is that there a number of leasing and hire purchase companies that will lend to newly formed businesses. Hover in the case of our £40k LCD business any finance company will view this as a soft asset with very little security. Most finance companies will advance up to £10k per decent guarantor providing that the guarantor is a home owner, has a reasonable amount of equity in that house and they must also have a clear personal search profile. There are however one or two companies that may take a view on the overall deal an providing funding for the whole project. If that doesn’t work then we are in the territory of second charges on property!
Tags: business finance, hire purchase
