How I secured a six-figure bank loan for my new business
In need of cash to grow his business and rent out office space, start-up founder Jamie Burrows approached his bank and made a winning business case...
Name: Jamie Burrows
Company: Vertical Future
Company description: Vertical Future is a London-based technology start-up focused on urbanisation and health. We carry out technology-based initiatives in urban agriculture, digital health, and air pollution. Our goal is to make cities healthier, now and in the future.
Started in: September 2016
Describe your start-up barrier:
Deciding to leave the corporate world to start your own company can be a daunting experience, with many risks. One of the key considerations to make is how you will be able to both build a company and feed yourself and your family. This comes down to money and the ability to access capital.
Upon ‘taking the jump’, I had a little bit of capital to support myself, my wife, and my two children for about 18 months. However, this capital was not sufficient to build my business, which required the purchase of a significant amount of equipment and the medium-term rental of business premises.
What were the practical steps you took to gain funding from a bank?
I secured a six-figure funding package from my bank, one of the biggest banks in the UK. The whole process took around five months from start to finish, and involved the following steps:
- First, I established and registered the business.
- I then looked to define the different funding options available. This process included setting up a meeting with my bank, in which we explored the options and discussed ‘what was needed’.
- Next, I developed a detailed business case to show to the bank. I used Microsoft Excel and PowerPoint, showing not only how the business would work but, more broadly, how I would also support myself and my family from a financial standpoint.
- I then had to be on hand to liaise with the bank, answering any questions they had which had resulted from my business case.
What was the outcome?
The first (almost) year of our business has been great. Having enough capital has really helped to bring my stress levels down and has provided me with more time to run the business and sell to customers.
The finance meant that, after just five months, we had been able to establish a fully-functioning non-executive board, and had attracted a significant amount of positive PR, including mentions in major newspapers and on TV and radio.
The process from company registration through to revenue generation took around nine months, although our operating framework wasn’t up and running until month seven… so things have happened quickly.
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We now want to move from start-up to scale-up and are actively engaging with investors (for equity) and with our bank (for debt) to facilitate growth.
What three key questions should other companies ask themselves before approaching a bank?
- What is the minimum amount of capital that I need to reach minimum viable product (MVP) or minimum viable business (MVB)?
- How much risk am I willing to take on personally? Have I considered how I am going to live while the business grows?
- What do I need to show and prove to the bank in order to be successful?
What one piece of advice would you offer to entrepreneurs who are seeking finance?
Most start-ups think about raising money and exponential growth before even proving that their business works. So, forget the long-term and the big picture and for now, focus on building a sustainable (small) business.
This will enable you to access further funding, maintain more control over your business, and offer a better bargaining position with investors and the bank.
Is there anything you would do differently?
I probably wasted a lot of cash focusing on business optimisation as opposed to customer acquisition. I would focus more on the latter earlier.