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gloucester girl

Loan for starting a new business

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Hello,

 

My husband and I are thinking about starting our own cafe/restaurant. We have about 15,000 pounds in savings. We have only been here for 3 months. We both have permanent jobs. I would continue with mine, while husband would leave his to run the cafe/restaurant. We are here on PR visas. Is it possible for us to get a business loan from the bank or another lender to help with start up costs? Or would the bank/lenders immediately say no as we have no credit history here? Where can we go to for advice about starting our own business? Any advice would be appreciated. Thanks

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I think the bank would like to see some sort of business plan, and business is looked at as separate to personal credit history. First stop is your present bank I would have thought.

good luck


Enjoying life in Queensland

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A bank will require security such as a mortgage over your home.

They won't just lend you money to start a business with no real assets to secure against the loan.

 

Do you have a home you can mortgage to get the loan ?


I want it all, and I want it now.

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No house. No mortgage. If my sister were to become a partner in the company, could she use her home as security? Also we would only be looking to borrow a relatively small amount. The cost of the business that we have seen is 90,000 dollars, which is about 45,000 pounds, of which we have 15,000 already. The deposit for buying a house is 15%. What is the deposit on a buying a business?

 

Thanks for your answers. We are getting a business plan together, but having never done this before we are doing lots of research first. Hence, the naive questions and assumptions!

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90,000 for a cafe/restaurant seems very cheap to me. Are you buying a going concern and are you certain this is genuine. If so then they will have accounts showing p&l which the bank are sure to want to see.


Timeline: 309/100 Sent 7/8/13, Money Taken 9/8/13, CO appointed 3/9/13. Med 3/12/13. Police check 4/12/13. VISA GRANTED 8/4/14, Subclass100. Recce August 2014. Arrived 30 July 2015.

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So you are buying an existing business? which is different to starting your own, this could make things easier if the business accounts look good and up to date and trust worthy. However a weeks worth of watching the business to see the customer base/volume, would be a prudent move.


Enjoying life in Queensland

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In answer to your question though, I think the bank will lend as long as they have sufficient residential security.

So if your sister has enough equity and is prepared to lodge it as security against the loan I expect the bank would approve it.

 

I'm not 100%sure of the issue if you wan't her to be a prat owner but put up all the security that could be an issue.

 

She could probably just take out a home loan redraw of her own and lend you the money directly if she wanted to.

 

Bear in mind most new inexperienced business people fail so be careful.


I want it all, and I want it now.

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90,000 for a cafe/restaurant seems very cheap to me. Are you buying a going concern and are you certain this is genuine. If so then they will have accounts showing p&l which the bank are sure to want to see.

 

My thoughts exactly. A very close examination would need to be made of the books. That is very cheap.

Small business has a very high rate of failure. A lot of caution required and eyes wide open.

Edited by flag of convenience

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There you go. Shows how naive we are: I didn't realise that there was a difference between buying a business and starting your own. To the people who said that 90,000 is cheap, that is interesting because we are looking at the inner west in Sydney and a quick scout on gumtree has revealed cafes being sold from a little as 60,000 in Newtown up to 150,000 in Annandale. How are the businesses valued?

 

We would want to start off on a small scale, even just a hole in the wall rather than somewhere too big. Don't worry we are doing our homework. This will probably take months, even not years, if at all to happen. Thanks for the advice, every word from people with experience is valuable.

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There you go. Shows how naive we are: I didn't realise that there was a difference between buying a business and starting your own. To the people who said that 90,000 is cheap, that is interesting because we are looking at the inner west in Sydney and a quick scout on gumtree has revealed cafes being sold from a little as 60,000 in Newtown up to 150,000 in Annandale. How are the businesses valued?

 

We would want to start off on a small scale, even just a hole in the wall rather than somewhere too big. Don't worry we are doing our homework. This will probably take months, even not years, if at all to happen. Thanks for the advice, every word from people with experience is valuable.

 

 

What you are essentially buying is the fit out of the shop. A popular region the cost will be higher than a less popular region but the big difference will be on the weekly rent. There will still be weekly rent which could be as much as 2-4K a week, council rates and more.

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What you are essentially buying is the fit out of the shop. A popular region the cost will be higher than a less popular region but the big difference will be on the weekly rent. There will still be weekly rent which could be as much as 2-4K a week, council rates and more.

 

All of which should be in the business plan!


Enjoying life in Queensland

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There you go. Shows how naive we are: I didn't realise that there was a difference between buying a business and starting your own. To the people who said that 90,000 is cheap, that is interesting because we are looking at the inner west in Sydney and a quick scout on gumtree has revealed cafes being sold from a little as 60,000 in Newtown up to 150,000 in Annandale. How are the businesses valued?

 

We would want to start off on a small scale, even just a hole in the wall rather than somewhere too big. Don't worry we are doing our homework. This will probably take months, even not years, if at all to happen. Thanks for the advice, every word from people with experience is valuable.

 

No one answer. Assets over liabilities, goodwill, turnover, longevity, location, profits. Like with everything you get what you pay for I suppose. 90,000 definitely a low valuation for a going concern so suggests that the numbers or something don't stack up. Yes, you can get cheaper but many such businesses cost many times more than this.


Timeline: 309/100 Sent 7/8/13, Money Taken 9/8/13, CO appointed 3/9/13. Med 3/12/13. Police check 4/12/13. VISA GRANTED 8/4/14, Subclass100. Recce August 2014. Arrived 30 July 2015.

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Be a little wary in Newtown.

 

There are too many cafes there. New cafes are always busy for a while but the crowds move on when the next new one opens.

 

I know of one cafe in King Street which has had at least four keen new owners in the last few years. Nothing wrong with the cafe (or owners) at all - just not enough customers on a daily basis to make it a flourishing business. Being busy on a Saturday is not enough.

 

Could be why some Newtown cafes are selling so cheaply?

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Find out if you have a Business Development Centre near you - most will give free or very highly subsidised advice. Have a look here https://www.becaustralia.org.au/ to find your nearest one, give them a ring and go have a chat with an expert. They deal with business startups all the time so will have some good advice, I'm sure


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