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I need €30,000 to get my business going - would this be considered as an average bank loan amount for a start-up?

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I need €30,000 to get my business going - would this be considered as an average bank loan amount for a start-up?

I’m afraid I am going to use the “it depends” as a start to answering your question.

€30,000 may well be a reasonable amount but it all depends on what you need it for, your ability to pay it back and what the risks are.

The idea of looking for bank finance only for your business will generally not be acceptable to a bank. A bank will want to see a mix of equity and debt in any business – they like to see a shareholder taking risk in the business.

They will like to see YOU, the business owner, taking risk, and if you really believe in your idea then you should be happy to take on some risk.

Aim for the following

As a rule of thumb I would expect a bank to give up to 70pc of the finance required by the business, so based on your calculation I would expect that you should be aiming for the following:

Equity (preferably you) €9,000 (30%)

Bank loan (Debt) €21,000 (70%)

Finance needed €30,000

You next need to address what the money is for. Broadly you need to split it into three categories:

Start-up costs

Researching your business
Legal and admin set up costs
Marketing your launch

Acquiring assets

Premises
Furniture, fittings, equipment, PCs

Working capital requirements

Purchase of stock
Advancing credit to customers
Less: taking of credit from suppliers
Purchase of labour to run the business

Ideally, you would finance the start-up costs from the equity investment. Acquiring assets will normally require long- term finance such as a term loan, lease or hire purchase agreement. Working capital can be financed short term, including an overdraft facility, as it's really only needed to finance “cash flow” while you wait to get paid from customers.

Answered by

John Crawley FCCA

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I need €30,000 to get my business going - would this be considered as an average bank loan amount for a start-up?

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Aim for the following

Answered by

John Crawley FCCA

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Education

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Technology

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