# new business with no funds



## celtic (23 Dec 2007)

This is my first posting, first of many I am sure.
I have recently set up a new business. I put in for a business loan and made an appointment with bank. They were impressed with business idea and I filled out forms and was told everything should be fine with application and funds should be in the next day. I went ahead and signed lease for shop and ordered supplies. I rang bank a couple of days later when I realized funds were not in account. I was told to come in as they needed more info. I was then only approved for half of what I was looking for. They only gave me start up costs that were showing on business plan.
This has left me in a panic. What am I going to do in January. Shop is fully ready to go but I have no funds left to pay everyone and rent is due first week of January. I am angry with bank and have appealed their decision and this was refused. I am only starting and already I feel that I cannot continue. I am dreading January and the calls that will start for clients looking for payment. I cannot get a personal loan as I have being working on this for months thus having had no wage. any advice on what I can do? Please help..


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## z103 (23 Dec 2007)

Typical bank.

Have you applied for a loan at other banks? If you do happen to find a decent bank for Irish SMEs, please let us know.


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## celtic (23 Dec 2007)

I thought I could only apply to a bank that I have an account with. I was told I could of got an overdraft if I was with them a year, I am only with them six months. Should I start trying other banks or would I be wasting my time. Because of the bank messing me about they bounced two cheques, I am sure angry clients will contact me after xmas. All I can do is pay a bit to everyone and try and keep everyone happy. Would bank give me an overdraft in 6 months time. I have lost all faith in them now. Would a complaint to bank manager help...


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## Brendan Burgess (24 Dec 2007)

Hi celtic

How much did you ask for? 
How much did you get approval for? 
Is the loan secured on your home? 

With respect, why did you leave it to the last minute to arrange finance for something that you had planned for months? You should not have entered into any agreements such as entering into a lease until you had your approval in writing from the bank. 

A lot of businesses think that the bank should take all the risk. I am surprised that they lent to you at all. I assume that it must be a small amount. 

Anyway, moving forward. If your cheques have bounced, don't wait for the recipients to call you. Call them first and tell them the truth. Apologize. Tell them that funding you expected did not come through and you are working on it. Don't avoid them. Some suppliers will have sympathy for a new venture. 

You will have to source your finance somewhere else. Can you remortgage your home? Can you borrow from a family member? 

I don't think that you should "complain" as such. You have been a customer for only 6 months and they lend you money. That is not bad. Where did you bank before that? Can you go to them?


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## Mpsox (24 Dec 2007)

Did you get anything in writing from the bank to say how much they would lend you. There must have been some written communication from them. I accept this is a tough time for you but if you went out and made committments based on a verbal agreement with a bank manager and nothing in writing, then you were very naive and need to chalk this down to experience

Sounds like this is very much a cash flow issue, but it also sounds as if your business plan is risky from the outset. If sales did not meet expectations right from the start, you were going to be in this position anyway


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## doberden (24 Dec 2007)

Did you try [broken link removed].  Good for business loans where you cannot get financing from a bank. You'll need a good business plan in place.


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## johni (24 Dec 2007)

go to your local credit union. lodge 100 euro to open an account thenapply for a loan. i have done this. worked a treat


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## Claragh (26 Dec 2007)

I agree with Johni go to your local Credit Union. Explain your problem to the Manager and i'm sure they will help you out.


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## celtic (28 Dec 2007)

Thanks for replies, all very helpful. ok I have made some mistakes and I have learned from them. I have been working from home for the last couple of months but I needed a unit away from home and this shop came up, great location and rent is reasonable. I applied for 6000 which included 3000 start up costs and some costs were outstanding costs I incurred from working from home, mostly advertising costs. I applied for the loan and was told that the funds would be in my account the following day, however a couple of days later was told they would only give me 3,000 start up costs. I did not have to put my home up as collateral. I have had sales and made some money already but I am just panicking about immediate bills in January.
I am worried about cashflow and I will open a credit union account in January to cover some costs. By the way I haven't opened shop yet. it is ready to go in January


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## z103 (28 Dec 2007)

> A lot of businesses think that the bank should take all the risk.



I'm surprised that many Irish banks think that they should take absolutely no risk, yet still get their high interest or bank fees.


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## mercman (1 Jan 2008)

There appears to be some misconception about Banks. I have no great love for them at all. However, they are moneylenders which have been placed into a respectable category. They really are not in the risk business - they lend money- charge interest and hope for capital repayment. Simple as that.


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## z103 (1 Jan 2008)

> They really are not in the risk business - they lend money- charge interest and hope for capital repayment.



Please could you explain how this isn't in the risk business? If an entity lends money, isn't there always the possibility that they won't get it back? (risk)


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## mercman (1 Jan 2008)

Yes - I agree. But when assessing lending requests they take all factors into account before making a decision. The manner in which Celtic has been treated is out of taste - to be told verbally that a loan is sanctioned and on the day of  drawdown rescind is quite pathetic. From reading Celtic's comments they have a business which has the possibility of being clouded over by broken promises, which could detract from the main scope and dent confidence. Stick with it and don't panic.


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## Bob the slob (4 Jan 2008)

If you take anything verbal from a bank as gospel then its your own fault.  I was the same getting my mortgage and thats how I learned my lesson.


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## Nige (4 Jan 2008)

If you weren't working for the last few months, you may be entitled to a tax refund. Consider submitting a tax return for 2007 straight away.

Have you spoken to Enterprise Ireland?


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## celtic (5 Jan 2008)

All replies have being very helpful, I was in a panic before christmas. I have worked out exactly what I owe and is not as bad as I thought. Runs to about 4000 divided among about six invoices. I have already started making money and able to pay off gradually. I am glad now banks only gave me 3,000. I am just going to pay off oldest invoice first which is last October and just get tougher (or nicer)on phone to anyone looking for money. They will all get paid eventually. Ongoing expenses run to 750 per month. My personal finances are in a mess but I am trying to focus on business and think long term. 
I will be seeing accountant this week so hopefully I will get some cash back from taxman, thanks for that Nige.
I have contacted Enterprise and were no use. I have to be in manufacturing business and I left in a letter requesting a mentor 4 weeks ago and heard nothing yet. I have found this all very daunting but aam has being fantastic. I know next 6 months will be tough. I dont know yet when I can get a wage but hopefully I can pay a bit and keep a bit. 
The main thing is money is coming in so I hope it keeps up.Just hope it comes in quick enough.

I have to say I have no faith in banks anymore and feel very let down. They almost finished me before I even started.


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## quarterfloun (7 Jan 2008)

Local Chamber of Commerce may be of some benefit to you. They will have seen this before and should have a good idea of where to point you.


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## celtic (7 Jan 2008)

In what way can the Chamber of Commerce help me Quarterfloun



quarterfloun said:


> Local Chamber of Commerce may be of some benefit to you. They will have seen this before and should have a good idea of where to point you.


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## mercman (7 Jan 2008)

Celtic - don't want to be a greasy spoon but I don't think the Chamber of Commerce would or will do anything for you.


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## celtic (23 Apr 2008)

Thanks for all the brilliant replies. I am still ducking and diving and trying to keep up with what is in bank account. Just heard today from accountant and I am due tax back of almost 3 grand. Best news so far this year. It will be my wage as my own account is so far in the red it is on fire. 
Raking it in the last two  months but paying out just as quickly.

I still panic every so often but I reckon another two months most people will be paid and then I will only have ongoing bills such as rent on office and advertising  and utilities and then I will receive a proper wage. My greatest problem with running this business is who to pay and how much and should I take what is left as my wage or leave as profit. I must look in doing a business course, it may help. I cant wait for the day to get these suppliers off my back but in fairness they have almost left me alone till now as it is now hitting the 4th month but they will be paid in time. I may then be able to afford a night out or even just a takeaway.
Thanks for taking the edge off the panic  last Christmas.


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