I’m in the process of setting up a bakery business. Our products are very well received and the aim is to have a little bakery in Chester where we live, offering delicious savoury and sweet treats.
We also want to supply local businesses with our products. We have started by attending markets etc, which is going well.
My question is, where would you recommend us going for a business loan, I have bad credit though which is really holding me back.
We have had a really difficult year with myself and my partner both being made redundant and we want to now start our own enterprise and really make a go of it. via email
I want to get a loan for my bakery but I’m worried about my credit score – what should I do?
Dave Fishwick, This Is Money’s business doctor says: My friend’s father had a bakery specialising in artisan continental bread and a small range of sweet products.
They exclusively supplied other businesses, including numerous independent retailers and a regional supermarket chain.
The feedback from this is that providing to the trade means margins are much tighter than a retail bakery, and many retailers also expect ‘sale or return’ terms, resulting in significant waste and further reducing profits.
There’s a lot more work and costs involved with logistics, staff, etc.
In summary, I’m told that a wholesale bakery is a tricky business to profit from, so perhaps it’s something you should try once you’re well established and maybe looking to take advantage of the economics of scale.
That being said, supplying restaurants and catering companies might be helpful for some extra revenue in time.
It sounds like you have all the ingredients to launch a successful business.
My advice would be to keep your borrowing to a minimum so repayments and interest costs remain a small part of your outgoings.
Firstly, various grants and government initiatives are out there to help businesses start up and survive.
Most councils have a helpdesk for companies and ambitious people like yourself planning to start a new business.
Send a note to us at Burnley Savings and Loans, and we will put you in touch with a member of our team, Mr Purves Ali, who will give you some advice on all your options.
Purves is an experienced and accredited business advisor with over 20 years of experience delivering new enterprise projects.
He offers advice and support to startups and existing businesses and advice on all available funding and grants.
You mentioned you have bad credit from the past so that you would be looking for a subprime loan. You can search for specialist subprime brokers online.
My advice is to search for a lending company that does manual underwriting rather than credit scoring your application, as this will give you the best chance of putting your case forward to someone you can actually speak to rather than a computer 300 miles away, that does not know or understand your situation and in which case will either say, No, or offer you a ridiculously high-interest rate.
Starting small is undoubtedly the best way, and it will allow you to learn the business without the overheads and costs getting out of hand.
I also have a friend who started a small and specialist dog bakery, especially for dog products, and started the business in her kitchen at home, Dianne from Millie and Ruby Dog Biscuits in Burnley.
Dianne began small and built the business up slowly but surely, only increasing her overheads as she increased her customer base, turnover, and profits.
I always say turnover is vanity, and profit is sanity. Remember, slow and steady wins the race. Good luck!
