Buying a business - which bank?

[NYCSavage]

Hi,

I currently live in UK and have been looking at a few businesses for sale in DR. I think its best to get a business loan in DR due to currency fluctuations etc.

Which bank would be best for this purpose? I would need a loan to purchase the business (currenty working on business plan) and a current account (also called a checking account) to pay any incoming finances into and to withdraw a wage for me and my girlfriend

Ive heard that Banco de Reservas is the only state run bank so would probably be the best option

Thanks for your help and advice

Tony

[BushBaby]

Hello Tony & welcome to DR1.
I am obviously feeling a bit stuoid tonight but why should 'currency fluctations' be different in the DR to the currency fluctuations in the UK or USA or Canada? Wouldn't it be better for you to borrow your working capital in a currency that will remain fairly stable so as to allow you to benefit from fluctuations?

Have you cheked out the rate for borrowing money in the DR? Have you got a track record here that a Dominican Bank would accept? Do you already have a cedular & residencia? If 'YES' to these, then you might consider talking to Skotia Bank (which has ties to The Bank of Nova Scotia) or BHD bank. I do however think that getting a loan from a bank in the DR is going to depend more on 'Who will lend you the money' rather than who you feel is more suitable/competent. Bear in mind that loans will cost you in the region of 18% - 20% per annum upwards. If you can get a loan in the UK why not consider their better terms? I am lead to believe that if you do NOT have residencia & a cedula, that getting a loan here will be nigh on impossible.

Be prepared for some very forthright answers (& questions) to your question because if you have not done business in the DR before, if you do not understand the mentality of doing business here, if you do NOT speak Spanish ........... then there are many who would advise just to pass your money over to the community now & don't bother trying to lose it by setting up a business.

Give this very careful thought & understand that all answers you get to your question are designed to be helpful - even if they seem extremely rude & aggressive!! Tell us more (keeping your business idea & plan to yourself of course) & some helful advice will be forthcoming I am sure. ~ Grahame.

[rubio_higuey]

I would take the loan in USD or EUR any time over loan in RDP. Even considering currency fluctuations, there are ways you can hedge against currency risks, such as futures and options. There are many tools on forex market that allow you to hedge against the risk.

Have you also considered fronting loan or parallel loan through a UK or major European bank?

Even without any forex hedge tools, the pure difference in the exchange rates (6-7% in the UK vs 18 to 20% in the DR) would warrant the loan in foreign currency, because the probability of currency fluctuation by more than the difference in interest rates is highly unlikely.

From the very business financial perspective I understand you want to borrow in RDP. But unless you have a track record here, as mentioned already, it will be very difficult to do.

Your better option is to do a direct loan from European bank and cover your currency risks by hedging on forex, using forward exchange market hedge, money market hedge or hedge using currency futures. You probbaly won't have much luck to get arrangements for parallel loan, but consider also fronting loan via European bank with direct access to the DR.

Good luck.

[cobraboy]

Banks are a totally different animal in the DR. I know many business people who go bankless, using other resources to accomplish the same things.