Personal Bank Loan to fund business

Yes, of course. The bank lends it to you, you lend it to your company, so it owes it to you and you in turn owe it to the bank. This applies even if your company has paid you a salary from it. Think about whether you really want to do this. Why not just borrow the money and use it as you would have used your salary? If you pass it through the company, you'd have to pay income tax on it, and you and the company would have to pay NI on it as well.

This assumes you really are talking about a real (i.e. limited) company. If you're just starting up a sole trader type of business, it doesn't make sense to be talking about it owing you anything, since you and it are one and the same legal entity. Likewise it doesn't make sense to talk about salary. In a ST business you take drawings instead (and I don't mean charcoal).

Probably not. Banks would not be too keen to lend to a startup with no proven track record. The interest rate might be highere even if they did. On the other hand, they will want to check out your own prospects before they give you a personal loan. Are you employed at the moment and intending to resign in order to devote yourself to your new business? Make sure you get the loan organised before you resign!!

In message , "-=D@n=-" writes

Having underestimated expenditure, and overestimated income, over many years of self employment, (and I'm still guilty of it ), are you sure that 2 months money will be enough. I.e. are you sure that your income will be as high as you are forecasting, and are you sure that it will commence within 2 months??

Do you own a property? Have you a mortgage on it? Perhaps you could get a further advance on the mortgage rather than going for a loan - rate would probably be less.

Rob Graham

Hmm, I'm just reluctant to borrow *too* much. I figure that if I'm not spending most of my life working in this job as I am now, I can spend decent time trying to promote my business and generate work for myself.

Rob

I do own a property, but I took an advance recently for home improvements. I wonder if they'll lend me more, but only over a couple of years as opposed to the 23 remaining on my mortgage. I don't want to borrow 5,000 over 23 years!

Thanks for the reply.

As long as your mortgage allows overpayments thats the way to handle that.

I wonder if they'll lend me more, but only over a couple of years as opposed

Everybody says this, as though they are committed for the term of the mortgage. But just overpay and if you overpay by the amount you'd be paying on a loan, you will be shot of it sooner than if it were a loan (because the rate will probably be lower). All you have to watch out for is that there are either no penalties for repaying that bit of the mortgage or, if there are, that it allows overpayments nevertheless. The best thing to do is to ensure that the further advance is on a standard variable rate, which generally have no early repayment penalties.

Rob

I know what you mean, but you absolutely must have the cashflow to survive, otherwise you close down with no job, no income, and a big loan.

It's very Catch 22 at the start, but you need to be reasonably sure.

In message , "-=D@n=-" writes

Borrow it on the normal terms, (repayments will be lower), and discipline yourself to pay it back on your own terms.

Slightly off-topic, but it may be that a limited company is not a good option, and a sole trader/partnership would be better - especially if there are likely to be (short term) losses.

Yes, that's a little bit worrying! Ideally, I would be doing work for myself at the same time as employed, and try and generate the money that way. But, I have so little time that it'd take me about two years!

Thanks for the reply.

Good point. I have a feeling that it doesn't, but I'll check tonight. It's an Abbey tracker.

Thanks for the advice.

Thanks Rob, I'll check tonight to see if I'm allowed overpayments.

Dan

Better that than going bust in a couple of months.

In message , "-=D@n=-" writes

Thats a very common mistake. Its easier for ask for too much now, than to ask for too little and then have to go back, cap in hand, later for some more because the chances of you getting more a seriously reduced at that stage.

This is also true.

In message , "-=D@n=-" writes

Borrow it over 23 years but make sure there is no early redemption penalty, and make over payments so that you clear it in a couple of years. This means that if things go belly up, or you have a slow start to your business enterprise, then your only commitment is the lower monthly payment needed to cover the 23 year loan.

Yeah fair enough. Thanks John.

Thanks John. If I find that my mortgage has no overpayment penalties, that's what I'll go for.