Start Up Business Loan

A question about : Start Up Business Loan

I have wanted to run my own livery yard/competition yard formany years now. I have owned and ridden horses for over 25 years and have a lotof experience in the running of such yards. The trouble is these yards do notcome up for sale very often at all and obviously come with a high price tag.After looking in my local area for years one has finally come up however it isЈ875,000. This is very good value for most of the properties near me as theyare in the Ј2m region. It is being sold this cheap as the couple are retiringand moving out of the area.

It is a profitable business with a net profit of aroundЈ2.5k each month. This is after a wages bill of Ј8k a month to staff members. Iwould not have the staff members as it would be family run. The couple do nomarketing for the yard and have lower than the market prices as they have notraised their prices for over 10 years. They admit, the yard was a side projectand so have not done much with it. The potential for expansion and profit isgood.

I want to know, what is the likelihood of me being able to get a loan to cover the cost ofthe property? I have a house which I would sell but there is probably onlyabout Ј50k equity in it. I have the experience and the business makes enoughprofit without any marketing or effort. I want to get further information fromthe yard but I don’t want to go if this is an impossibility.

Any ideas on where I should go from here would be helpful.Thank J

Best answers:

• you will obviously need to get a business loan from a bank,they will want to see you investing a lot of your own money into this so 50k may not be enough,they will also want to see a very detailed business plan and they will need to see at least 3 years of accounts from the business
  i suspect that you will have 2 hurdles(no pun intended)raising enough of your own capital and convincing a bank to lend you what would be a lot of money
  good luck
• You will need between 30 and 50% before the banks will look at you seriously, sorry but 50k doesn't even come close.
• ..........and getting rid of the staff who have worked loyally for the business to be replaced by family will be great PR in the locality.
• to fund a loan of 825,000 at 5% the interest alone would be 41,250 pa or 3,438 per month
  at 10% is would be 82,500 pa or 6,876 per month
  that is without repaying any capital and assuming you didn't need any working capital
  you need a proper business plan
• You have been wanting to own and run your own livery business for years but appear to have made absolutely no effort to save any money towards achieving that goal.
  I can't see anyone being interested in a deal like that. Why would a lender risk their money if they see that you are not risking any of your own
• The couple who own it want to retire and are therefore selling it for half the cost of nearby liveries? If that makes it cheap, I would be asking more questions about why.