Home – New Forums Money matters Any ideas?

  • This topic is empty.
Viewing 11 posts - 1 through 11 (of 11 total)
  • Author
    Posts
  • #977655
    anna12
    Member
    • Total posts: 8
    Up
    0
    ::

    I have made an offer on an existing business, so far no-one wants to lend us the money, there are two of us going in as partners(we both have working spouses), one of us working in the business and the other one remaining in their respective job. We have three houses between us (all with a mortgage). The business is a small takeaway cafe and we only want $100000 to get into it. Is there a reason banks are so strict?

    thanks
    anna

    #1099665
    DanielM
    Member
    • Total posts: 241
    Up
    0
    ::

    A lot of factors can determine why a bank will not loan you money. Bad credit rating, mortgages, low economic environment, low income etc etc

    #1099772
    DanielM
    Member
    • Total posts: 241
    Up
    0
    ::

    A lot of factors can determine why a bank will not loan you money. Bad credit rating, mortgages, low economic environment, low income etc etc

    #1099666
    MelissaN
    Participant
    • Total posts: 111
    Up
    0
    ::

    Have the banks been provided copies of 3 years’ financial statements and a cashflow projection for the next 12 months +?

    If so, the bank may see this cafe as a business that is not viable.

    Have you contacted your/an accountant to discuss the situation prior to going to the banks and set up a trust / company or otherwise?

    There are a lot of factors involved.

    #1099773
    MelissaN
    Participant
    • Total posts: 111
    Up
    0
    ::

    Have the banks been provided copies of 3 years’ financial statements and a cashflow projection for the next 12 months +?

    If so, the bank may see this cafe as a business that is not viable.

    Have you contacted your/an accountant to discuss the situation prior to going to the banks and set up a trust / company or otherwise?

    There are a lot of factors involved.

    #1099668
    4N_Man
    Member
    • Total posts: 122
    Up
    0
    ::

    Hi Anna,

    Things have definitely changed, the banks are asking for more financials. I’m also told they are not lending so much on goodwill so I guess it all depends on your equity in the houses and if you can use your wage-earning partners to cover the loan. If you can then you should have a good chance, if you are relying on the business then it will come down to the actual figures provided by the Take-away owners. I’d add a couple of things for you to think about

    1. Don’t pay for potential – pay for what is eg the current value of the assets & profit, not what the owner or you think it might do. Also don’t take on board any comments the owner makes about how much she/he is taking under the table. Only pay for what is demonstrated eg BAS returns etc

    2. Ask yourself, how much would it cost me to setup a take-away from scratch? Cafes etc are closing down everyday so you can pick up cheap equipment and you may be able to find a better location with a better lease?

    3. Get an accountant to run the numbers and give you her/his hard nosed opinion. Often people get into trouble because they get emotionally attached to the idea and commit themselves to an un-profitable, long hours business where all the money goes to the landlord, wages, bank and franchise. You and your business partner need to pay yourselves at the very least $30k each so get an accountant to see if it is a viable business or not.

    4. Offer them whatever the accountant says – even if it is $50 or $60k, they can only say No and you’ve lost nothing. i’ve met lots of cafe-takeaway owners who are desperate to get out, there are always Takeaways for sale so don’t get too attached to this one.

    Good luck.

    Cheers

    #1099774
    4N_Man
    Member
    • Total posts: 122
    Up
    0
    ::

    Hi Anna,

    Things have definitely changed, the banks are asking for more financials. I’m also told they are not lending so much on goodwill so I guess it all depends on your equity in the houses and if you can use your wage-earning partners to cover the loan. If you can then you should have a good chance, if you are relying on the business then it will come down to the actual figures provided by the Take-away owners. I’d add a couple of things for you to think about

    1. Don’t pay for potential – pay for what is eg the current value of the assets & profit, not what the owner or you think it might do. Also don’t take on board any comments the owner makes about how much she/he is taking under the table. Only pay for what is demonstrated eg BAS returns etc

    2. Ask yourself, how much would it cost me to setup a take-away from scratch? Cafes etc are closing down everyday so you can pick up cheap equipment and you may be able to find a better location with a better lease?

    3. Get an accountant to run the numbers and give you her/his hard nosed opinion. Often people get into trouble because they get emotionally attached to the idea and commit themselves to an un-profitable, long hours business where all the money goes to the landlord, wages, bank and franchise. You and your business partner need to pay yourselves at the very least $30k each so get an accountant to see if it is a viable business or not.

    4. Offer them whatever the accountant says – even if it is $50 or $60k, they can only say No and you’ve lost nothing. i’ve met lots of cafe-takeaway owners who are desperate to get out, there are always Takeaways for sale so don’t get too attached to this one.

    Good luck.

    Cheers

    #1099670
    beancounter
    Member
    • Total posts: 159
    Up
    0
    ::

    How about asking for vendor finance? See if you can pursuade the vendor to “lend you 40%” and then go to the bank and say you have the 40% can they finance the rest

    Have you done up a professional looking business plan with cashflow forecasts, marketing strategies etc?

    As 4N_Man says, cafe-takeaway businesses come and go very quickly – which is why the banks are so reluctant to lend

    Try non-conforming lendors – private finance lenders such – if the “DEAL” is good enough, you can always find people to lend you money. And if they’re not willing, sometimes they know more than you

    Tha bank may actually be doing you a favour by keeping you out of debt!

    #1099775
    beancounter
    Member
    • Total posts: 159
    Up
    0
    ::

    How about asking for vendor finance? See if you can pursuade the vendor to “lend you 40%” and then go to the bank and say you have the 40% can they finance the rest

    Have you done up a professional looking business plan with cashflow forecasts, marketing strategies etc?

    As 4N_Man says, cafe-takeaway businesses come and go very quickly – which is why the banks are so reluctant to lend

    Try non-conforming lendors – private finance lenders such – if the “DEAL” is good enough, you can always find people to lend you money. And if they’re not willing, sometimes they know more than you

    Tha bank may actually be doing you a favour by keeping you out of debt!

    #1099673
    anna12
    Member
    • Total posts: 8
    Up
    0
    ::

    Thanks for your advice everyone, we have done all of the above, but the banks just wont budge because of the “responsible lending” clause they have in place. I think a loan shark is my next step lol

    #1099776
    anna12
    Member
    • Total posts: 8
    Up
    0
    ::

    Thanks for your advice everyone, we have done all of the above, but the banks just wont budge because of the “responsible lending” clause they have in place. I think a loan shark is my next step lol

Viewing 11 posts - 1 through 11 (of 11 total)
  • You must be logged in to reply to this topic.