Funding options - Business expansion
Discussion
Hi Gang,
We are incredibly lucky to have a very successful business, even more so since covid, we just cant keep up with demand and spend most of our days turning customers away. We are also avoiding advertising and marketing as we would just annoy people that they cant come (we are fully booked 7 days a a week for the next 13 months, and have a waiting list/cancelations list of over 100 people).
Our 2nd build is getting close to being signed off now, and we are on to the stage of financing it, incredibly annoyingly, the bank have decided that due to covid their lending appetite on property isn't what it was and may not be able to help anymore, despite previously accepting us (expired offer).
Places like funding circle will only lend to you if your business had been adversely affected by covid, which seems bonkers, turning successful business's away to instead invest in those on the rocks.
Anyway, early days, but what other options should we consider looking at, that are safe secure and lower rate, long term too, 10 years +.
Lots of off the shelf asset finance, but this is a building, with foundations etc, so not really classable as an asset as such I think.
Thanks
We are incredibly lucky to have a very successful business, even more so since covid, we just cant keep up with demand and spend most of our days turning customers away. We are also avoiding advertising and marketing as we would just annoy people that they cant come (we are fully booked 7 days a a week for the next 13 months, and have a waiting list/cancelations list of over 100 people).
Our 2nd build is getting close to being signed off now, and we are on to the stage of financing it, incredibly annoyingly, the bank have decided that due to covid their lending appetite on property isn't what it was and may not be able to help anymore, despite previously accepting us (expired offer).
Places like funding circle will only lend to you if your business had been adversely affected by covid, which seems bonkers, turning successful business's away to instead invest in those on the rocks.
Anyway, early days, but what other options should we consider looking at, that are safe secure and lower rate, long term too, 10 years +.
Lots of off the shelf asset finance, but this is a building, with foundations etc, so not really classable as an asset as such I think.
Thanks
sidekickdmr said:
Hi Gang,
We are incredibly lucky to have a very successful business, even more so since covid, we just cant keep up with demand and spend most of our days turning customers away. We are also avoiding advertising and marketing as we would just annoy people that they cant come (we are fully booked 7 days a a week for the next 13 months, and have a waiting list/cancelations list of over 100 people).
One theory suggests that you’ve underpriced. That theory goes on to suggest you should up your price to regulate demand to the point you’re comfortable with based upon your objectives.We are incredibly lucky to have a very successful business, even more so since covid, we just cant keep up with demand and spend most of our days turning customers away. We are also avoiding advertising and marketing as we would just annoy people that they cant come (we are fully booked 7 days a a week for the next 13 months, and have a waiting list/cancelations list of over 100 people).
A friend of mine has been looking to buy into a 'retreat' glaming style business or equally set one up.
He did a load of research on finance options, and the best he got, worked out at around 12% Apr.
(And this required a PG from a director). The other options for him were mid teens and from high networth individuals.
The argument being the asset was almost worthless without the land, and a huge chunk of the cost was the build, so little or no real recoverable security.
It might be possible to raise finance against the 'income stream' but again without recoverable security, and being in tourism, the rate compared to a typical mortgage might look eye watering.
A left field option might be an investment into the overal ltd co, you lose some equity, but the company gets a huge slug of cash without taking on any more debt, you could always structure the deal so that you have an option to buy the stake back (at some predetermined value).
He did a load of research on finance options, and the best he got, worked out at around 12% Apr.
(And this required a PG from a director). The other options for him were mid teens and from high networth individuals.
The argument being the asset was almost worthless without the land, and a huge chunk of the cost was the build, so little or no real recoverable security.
It might be possible to raise finance against the 'income stream' but again without recoverable security, and being in tourism, the rate compared to a typical mortgage might look eye watering.
A left field option might be an investment into the overal ltd co, you lose some equity, but the company gets a huge slug of cash without taking on any more debt, you could always structure the deal so that you have an option to buy the stake back (at some predetermined value).
One option might be to make a song and dance about fact you are fully booked for 13months, put up your prices for 2022, then take bookings now with a range of discounts for payment upfront. e.g. 100% gives you 20% off, 50% = 10% off etc. That way you get cash in.
Or something more creative, pay in full upfront and get some posh hamper (delivered in time for Xmas this year) and an activity day (for the break) thrown in etc etc.
Also take bookings for the new lodge with same payment upfront scheme.
I presume you've had the £50k bounceback loan already.
Then start to look at other creative ways to get cash in your pocket e.g. HMRC are looking very kindly on time to pay requests, that should stretch your cashflow out.
Or something more creative, pay in full upfront and get some posh hamper (delivered in time for Xmas this year) and an activity day (for the break) thrown in etc etc.
Also take bookings for the new lodge with same payment upfront scheme.
I presume you've had the £50k bounceback loan already.
Then start to look at other creative ways to get cash in your pocket e.g. HMRC are looking very kindly on time to pay requests, that should stretch your cashflow out.
Thanks all for your thoughts, certainly some things to think about,
Amount, approx 200k
As for it being a "glamping" business, this is a little different, this is a proper residential new build, meeting same regs as a new build house, so its securable and permanent, unlike a safari tent or something, think of it as a new build holiday cottage/apartment.
Amount, approx 200k
As for it being a "glamping" business, this is a little different, this is a proper residential new build, meeting same regs as a new build house, so its securable and permanent, unlike a safari tent or something, think of it as a new build holiday cottage/apartment.
Wilmslowboy said:
The other options for him were mid teens and from high networth individuals.
The argument being the asset was almost worthless without the land, and a huge chunk of the cost was the build, so little or no real recoverable security.
Assume in the case the land was mortgaged? Otherwise the obvious way of doing it would have been loan secured against both the property and land. The argument being the asset was almost worthless without the land, and a huge chunk of the cost was the build, so little or no real recoverable security.
sidekickdmr said:
Thanks all for your thoughts, certainly some things to think about,
Amount, approx 200k
As for it being a "glamping" business, this is a little different, this is a proper residential new build, meeting same regs as a new build house, so its securable and permanent, unlike a safari tent or something, think of it as a new build holiday cottage/apartment.
Do you sell the property / land or rent it out ?Amount, approx 200k
As for it being a "glamping" business, this is a little different, this is a proper residential new build, meeting same regs as a new build house, so its securable and permanent, unlike a safari tent or something, think of it as a new build holiday cottage/apartment.
If a mortgage was secured on it, could it be repossessed and sold on ?
cheers
Our house is surrounded by 12.5 acres of land, our house and land are mortgaged commercially.
By building this 2nd retreat, our estate valuation would go up more than the build cost, and therefore would be a securable asset.
Makes sense to use the same bank as the mortgage, but they as mentioned have pulled any investment in any projects like this at the moment
By building this 2nd retreat, our estate valuation would go up more than the build cost, and therefore would be a securable asset.
Makes sense to use the same bank as the mortgage, but they as mentioned have pulled any investment in any projects like this at the moment
loafer123 said:
Have you thought about trying Funding Circle?
sidekickmdr in his OP said:
Places like funding circle will only lend to you if your business had been adversely affected by covid, which seems bonkers, turning successful business's away to instead invest in those on the rocks.[/quote
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