Heya.

This is my 1st time to this forum actualy i was desperatly looking for some information and came across this forum.. i am really hopeful that you people will helo me out. And i dont have much time left so please can you reply quickly.

If you can read the following article and then suggesst some questions it would be great but if not can anybody please give me a list of questions banker ask customers when they call in banks for loans (to start their own business).

Here is the article.

Dog Hotel

Sarah Thomas and Anne Burton became firm friends at University. They share a love of animals and both held part-time jobs at a local kennel to boost their student incomes. They lived together for two years prior to graduating with honours degrees in Management and Economics respectively, and got on really well together. Unfortunately, University had also left the pair with large student loans to repay, Sarah’s is £8,500 and Anne’s £10,000, as well as student overdrafts with your bank.

Although University had prepared the pair for jobs in City based financial institutions their desire to work for themselves to build up a business was strong and they have now approached Countrywide Bank plc with a proposal:

Sarah and Anne have worked out that they would need a loan of £50,000 to complete the purchase of a small farmhouse set in one acre of land close to a regional airport. The farmhouse was for sale at £95,000. Sarah’s wealthy parents had agreed to lend Sarah £50,000 for the venture although they required only payment of interest at 5% each year and no capital repayment for the first five years of the business. Anne’s parents were not as wealthy but had agreed to provide a guarantee for £10,000 should the need arise.

The farmhouse was to be renovated and converted into living accommodation for Sarah and Anne and, outside, luxury dog kennels with heated dog runs and bedrooms and piped music. The “Dog Hotel”, as the business would be called, recognised that increasing numbers of people were using the nearby airport to go on short holidays on low cost airlines. With dog ownership estimated to be about 25% of the population Sarah and Anne felt that large numbers of people would want to have their pets looked after. Permission would be sought from low cost airlines to advertise on their websites in order to target their market. Bookings would also be on-line as Sarah had studied website design at University as part of her course and was confident that she could maintain a site.

Experience as kennel maids had shown them that typical kennels in the area were very basic. The animals rarely got a daily walk since so many were accommodated at one time there were too many for the small number of staff to cope with. Typical kennels charged £8-£10 per night.



Sarah and Anne were determined to address this by limiting guests at the “Dog Hotel” to five at any one time. For this individual attention and luxury surroundings the guest’s owners would pay £30 per night.

Required.

• A prioritised list of questions you would wish to ask Sarah and Anne when they call at the branch. Why have you given some questions more importance?

• State, with reasons and general conditions (interest rate, fee, security), whether you will help Sarah and Anne if their answers to your questions are favourable.

Many Many Thanks in advance

I would suggest that you take this to a local commercial lender in your area and ask their advice. Since your currency is in pounds, and based on your atricle, I am assuming you are a student in the U.K. looking for help with an assignment. Since the bakers on this site are American, we would have no idea what the laws are in your country regarding start-up businesses, lending statutes, etc.

Lenders generally are very skeptical of start-up businesses. Statistically, most of them fail. Lenders generally will want to see a written business plan, very specific, as to where funds will come from and where funds will go to for the start up process. Personal financial statements also would be required as well as projected business financials. All line items will be scrutinized for expenses that are omitted. Lenders will be very skeptical that someone could run a business web site by themselves just because they studied it in school. Things would go better for you if things like seeking permission to advertise on the web site of low cost airlines were actually firmed up before you went into the bank. Would bookings be only online? Why would you shut off other avenues to your business?

No lender will make this loan unless there is collateral for more than the full loan amount in the form of cash, marketable securities, or real estate. Lenders also will try to get co-signers or guarantors who can afford to repay the loan; Sarah's parents seem likely candidates.

The interest rate would be the prime rate plus 3%, adjustable daily, if you could satisfy the collateral and/or co-signer requirements. You also could expect to pay a hefty up-front fee, maybe about 3% of the loan amount, on top of any fees to appraise the collateral, process the loan, etc. A loan to a start-up requires much more work from a lender's perspective. You might do better if you brought in at least one partner who actually ran this type of business or a related type of business.

Thanks a lot that was really very helpful.