Jer

The bank (RBOS) is re-negotiating our business loan, I have just had the contract through. They want 6.25% above base that's 10.75% at the moment. The business has been trading for over a year and a half and is making good profit and is a very stable business. The loan is for £100k and will be paid of in 5 years. Does this seem expensive. Any one else have a business loan and what interest do you pay?
I am very happy with the bank but thought it would be cheaper than that.

TIA

Jeremy

fast bloke

Depends on the terms of the loan, but that seems very expensive to me. Also depends what the loan is for. If it purely for speculation/cash flow, then the rate is probably fair enough, but if it is for asset finance (anything you can sell later) of any description then you should be able to get it for around 6-7%. You could probably get 4 personal loans at a much better rate than 10.75

Jer

It's startup costs from the first year, so equipment we / the bank could sell if we did get into problems. Startup costs were £250k so we have more than £100k in assets.

fast bloke

Can you go for a commercial mortgage (Do you have land/buildings that you can use as security) or is it only equipment.

john banks

Different business (low risk medical practice) but our loans are at 1% over base rate. Secured against property though.

Jer

The units leased so it's unsecured, It's a dental practice so low risk. I may ask for a better rate secured on the house.

Who's your loan with John??

paulwrxboro

i pay 5% over base... but hate the fact

StickyMicky

i got a loan before i left my old job

David Lock

Are there loan companies/banks that specialise in medical and dental practices? We got a business loan for a dental practice but this was years ago and I have lost my contacts. But it was certainly way less than 6.25 over base. I think you are being taken. Will MDU or the other one (?) give you a steer? Or ask another practice what they did. dl

Reffro

Three things are against you when the interest rate was set, no freehold less than 3yrs accounts and the short term for the loan. Putting those together the rate you have been offered is not unusual. I've dealt with RBOS in the past and they are a good lender, willing to support businesses with potential.

Yes offering full security will lower the rate, but by how much is debatable, due to the short term and lack of accounts. You need to weigh up the risk of offering the security vs the reduction in the interest rate. The difference in the amount of interest payable is likely to be small compared to the value of the security, so think hard about it.

I can talk more about this at length, but I would look to renegotiate to rate with the bank, and ask about a capped rate to protect you further. For more advice talk to someone like Christie First, they are commercial loan specialists, they might not know about Dental practices per se, but they do know everything about loans, and their talk is free.

john banks

Jer, ours is Lloyds TSB Scotland Business or whatever they call themselves. I think being longer term and for partnership shares of the property and other capital balance it might be a different situation?