Sam Kidd's thoughts on business

Commercial Property, I know I have had a rant on here before about leases for commercial property and because of this I have found people coming to the site that are searching for info on leasing of commercial property. I was also talking to a few people about this as well and I forgot what it was like when you’re first looking for a property to rent to start a shop or business. So I thought I would put down just a few basic things that might help people out.

I remember when we were first looking for a shop to rent for AREA51 and going into all the property places to ask about commercial property or retail units.The first time I met with a property auctioneer they asked me was I looking to buy a lease or just looking to rent. I was think to myself, well aren’t they the same thing. Well they are and they aren’t.  The easiest way to explain buying a lease is before you can pay rent you must buy the right to pay rent. I know this sounds crazy when you’re first starting out into the retail world that you must pay to rent.

So the basic story is, lets say you have found a shop you like. This shop has the sign lease for sale. You ask the auctioneer how much it is. They say it 90k; you then cough up a lung and need a seat. So what’s going on here, well the shop you are looking at is owned by a landlord. He owes the building. Then he decides he wants to rent the building or part of it for retail. Now to protect that persons business they get a lease, which is the right to rent and run a business. Now the landlord can’t just say get out of my building I want it back now. So the person has their business protected, but if they want to close up shop they can sell on this lease to someone else so they can run a business there. So if you wanted this shop for yourself you will have to pay 90k cash to the person who’s business is closing down. The other down side to this is it is just like buying a house. In the way that it goes to the highest bidder, so there may be a bidding war ahead for a retail property.

Ouch I hear you say. I know this is a pain, especially if you are a start-up business. The only good thing is you now own a bit of an asset. If you then decide in a few years time you need a bigger shop or that shop didn’t work out for you, well then you get to sell the lease. You may make more or less, it all depends on demand and other factors with the shop.
Even though I feel the lease is an asset the banks don’t look at them this way. Not a huge shock there really. I wrote a bit here about trying to get a loan using the lease as equity before. Bloody banks!!

This is a really basic look at retail leases but it may help you get a better idea of how it works. If you have any question just email me or write it into the comments.

I love clever Ad's. Guess there is a part of me that would love to work in this area. I love finding ads that are different from the norm and you know they had a bit of fun making them.
I'm just going through my usual 'I'm bored' sites at the moment. I was looking at Coolhunter when I saw this ad.


It's from Isbank in Turkey.  This is the front view.



And this is the back view. What a great way to make people slow down
and read your ad, and remember it. Fantastic!

Right, I could do a rant on what I think of banks in this post but I will restrain myself as best I can.

I thought I would post this blog on banks in case any one else was out there looking for money from Irish banks.  Recently I went to three banks looking to get 35,000 euro to part fund a new business idea. I was approaching the banks looking or an unsecured loan, but I wanted to use this money to help secure a lease, so I was hoping to use the lease of the property as some form of security, as I figured this would have a value.

The first bank I called on was AIB. Now, this is the bank that my current business banks with  We have a great account with them so I thought this a good place to start. I rang up my bank manager, who was away so I left a message, I asked could I get an unsecured loan for 35k using the lease as a form of security. A few days past before I got a brief call."I'm sorry but AIB does not do look at a lease as a form of security. By the time I got this phone call I was already talking with two other banks so I just thought I would  just leave it at this.

The second bank I talked to was Bank of Ireland. I arranged a meeting with the Patrick St. branch and met with the lady in charge of commercial lending.  I had my business projection and trade history from my current business with me. The meeting went well  and she seemed to like the idea and felt it was a sound business, but of course in the end she had no final say in the loan and she would have to write to Dublin to find out what they think. So two days later I rang up to ask if there had been any news.

There was she said, Dublin had come back with a report saying that my running costs for the new business were to high , and so the loan would not be approved. This wound me right up. I then started my attack down the phone to her. Iwent on about the fact that I have a retail business up and running now, AREA51, which she knew, so the figures I had were based on experience. I asked if she would like me to redo the figures so that the world would look beautiful and fluffy where everyone I hire would want to work for nothing and Mr. ESB would only charge me half price cause I'm such a nice guy, and so on. I stuck to my orginal figures and argued that they were right. In the end she seemed to agree with me. She said she would get back to Dublin and fight my corner but she could not promise anything.

 I have to say she was great and she was straight up with me. But in the end I'm fighting with her and shes fighting with Dublin, and when it gets to Dubin everything is just entered into the computer and it like in the show Little Britain "computer says no!" After a few more days Dublin came back, the best they would offer is 25k. Well at least it was some sort of a result and it proved that if I stuck to my guns and could prove the business I could fight to get results.

A few years ago if the bank had said sorry no to me, I would have just said ok thanks bye. I let her know I was talking to another bank so I would not accept the offer yet and I would get back to her. I also asked about free banking if I went with it. She said they wouldn't do it, but if they look back on how much activity there was during the first year they would look at what they could do for me. Not really good enough!

The 3rd bank I went to was Ulster Bank. I had a meeting booked there and went in to meet the Commercial Manager.  He was really nice and I talked to him about my business idea and showed the figures that I had done.  I told him I had no security but hoped to use the lease as the security. He was open to this but said they this is not the norm. He also said this would have to go up to Dublin for approval, I thought, oh great here we go again 'computer says no' started replaying in my head. I handed over all my documents, he said he would get back to me in a few days. 

A few painful days later, of which during this I was fighting with Bank of Ireland, I was praying for some good news. His business partner rang back and said he would now like to meet with me to get a bit more info about my business idea. So off I went again.  He looked back over everything I had done out and offered some great advice, such as, if I could get an accountant to redo my figures it would look better for the guys/ computers in Dubin, and it would help my chances. So off I ran, I got hold of my accountant ,who in fairness, in no time re-did all my figures and made them look professional as well as print them on their headed paper. This is something I would recommend to anyone do before you talk to a bank. I took them back to the bank and that day he sent off all my stuff to the dreaded Dublin.

The wait was painful, people were away on holidays, so they were short staffed in Dublin so everything was taking longer than normal. Then the phone rang... "I'm sorry We couldn't get the loan for 35k " was the news. My heart sank.. "but you have been approved for 30k". Sorted!! Thank god! I went back to the bank to go through all the documentation.  I noticed that the loan rate was fantastic. I can't remember what is off hand,  but it was below 5%. I think it was round 4.5% but I will have to find out for sure. (compared to what I'm paying on another business loan it's a hell of a lot better) They also gave me 2 years free banking with this as well. I have to say Ulster Bank had out done themselves. I found everyone I was dealing with in the bank really nice. Even in the few times I have been in there, the girl in customer support remembered my name, which is something I love in a business and try to do myself in AREA51. It's small things like this that builds customer loyalty. I will be interested to see how I get on with Ulster Bank once I start using them on a daily basis. I will keep you posted.

I have to say Ulster Bank have come out on top by miles. I was talking to someone at a wedding not so long ago who works in Ulster Bank in Dublin. He said that they had said they want to start to help out new businesses and in turn become the best bank in Ireland. Well so far they got my vote.

UPDATE: the Loan rate is 4.9% Ulster bank have a startup offer which is the 30k plus free banking and the good loan rate. If you looking to start up a business I would recommend going and chatting to Ulster Bank.