StartUp Loans

[chrisaxe21]

Hi all,

Has anyone any experience on whether the government backed StartUp Loans was successful for them in terms of getting one approved? I've also read some stories that the loan provider can be pushy and demand the loan back quicker than intended and/or with extra payments required.

Are these loans a good idea to start up as a contractor or can they be overbearing and a hinderence?

I'm hoping to use the loan as a buffer really, for those quieter months to keep all outgoings covered, so until the contracting takes off I want to play it safe. I am actually hoping I never need to use the loan and when I have my own savings built up from contracting the loan will be paid straight back.

Chris

[northernladuk]

Why on earth would you want a loan as a contractor. Just tighten your belt in the first three months and get a warchest started. Shouldn't be hard unless you to spend every penny you earn from the word go. I don't know one single contractor that's done this which speaks volumes.

IMO spend sometime working out what you will earn and how much need to live on for the first quarter and then see how you feel.

Have you checked the eligibility for them?

[chrisaxe21]

It's more down to the forum posts I've seen of some people having a contract that lasted only a few days. The risk of not having a contract immediately after with my outgoings is simply something I cannot allow.

Tightening my belt isn't an option either due to other financial commitments so a buffer in the bank in case the contracts don't come is vital to my plan.

If anyone can input that'd be great

Chris

[northernladuk]

I can't see your business plan of using it to fund your lifestyle in case you don't get a gig is going to work very well TBH. It's also 6% interest. Have you had a look at the peer to peer lending sites which might offer better interest rates with less hoops?

[Goatfell]

It's more down to the forum posts I've seen of some people having a contract that lasted only a few days. The risk of not having a contract immediately after with my outgoings is simply something I cannot allow.

Tightening my belt isn't an option either due to other financial commitments so a buffer in the bank in case the contracts don't come is vital to my plan.

If anyone can input that'd be great

Chris

It's doubtful whether your "business plan" would make it past the initial enquiry and IIRC you start repaying it, or at a minimum the interest, straight away.

But if you did qualify: you say you need the loan as a buffer in case contracts don't come through, are you going to borrow the equivalent of three months, six months expenditure? If you don't pick up a contract in that time (which is quite possible) then you're broke with the same outgoings plus a loan to pay off - not a good place to be.

What happens if you become ill, break a leg or are injured in a car crash, do you think you'd be able to invoice if you're in traction?

You may be lucky or you may even be very, very good and pick up high paying contracts from the start, but it's highly risky and from the tone of your posts, it sounds like you're quite risk-averse.

If your finances are on such a knife-edge, then you really ought to consider if a move into contracting is feasible at the moment.

[chrisaxe21]

Peer to peer. I'll look into that. Thanks

Fortunately I have income protection lined up for the day the first contract starts, so I will be covered in case of injury...upto 2 years...covering my extreme sports too :-)

In terms of forming a company, paying an accountant, insurances, etc I also have those costs covered. It's simply the buffer I'd like to have in the bank before I've saved enough from the contracts to build up my own buffer.

So, no, I'm not completely in a position to move into contracting for reasons I've explained but I also could...but it would be risky too.

[northernladuk]

Who's your income protection with? I thought they were a little dubious for contractors bearing mind our small wage & divis situation?

[chrisaxe21]

Friends Life cover you for pretty much anything. Instant payout for injury too. A mate broke his wrist and got £900 instantly...3 days after taking out the policy. They're good insurers.

[TheFaQQer]

Tightening my belt isn't an option either due to other financial commitments so a buffer in the bank in case the contracts don't come is vital to my plan.

I'd consider incredibly carefully whether contracting is for you, in that case.

As others have said, what are you going to do if you get nothing for a few months - you're now saddled with additional debt at 6% interest.

Have a look at this thread and see how easily it can happen that you don't find work for a while - if it's too long, jump to the executive summary instead.

[TykeMerc]

Indeed, what they all said, the way your posts read is that you simply haven't the resources to take on the risk (and yes it is a real risk) of contracting.
Considering borrowing up front is unlikely to lead to long term success and as pointed out you may not even meet their lending criteria.

If you feel you're cut out to be a contractor and have marketable skills that can keep you in work, then I'd suggest you spend some more time earning and saving in permie land first to build up the buffer you need to feel comfortable.