Business Loan

[LIL EVO]

Anyone have contacts? Reviews, suggestions?

Looking for a business type loan to expand, purchase a property, land, or something similar.

[Nickerz]

Anyone have contacts? Reviews, suggestions?

Looking for a business type loan to expand, purchase a property, land, or something similar.

What you'll need to get a business loan

A business plan for your business
Current financials that go back at least 2 years
Tax returns for those two years (this is the proof of your financials, but also they'll want nitty gritty details like cash-flow etc)
A proposal for how you'll use your proceeds (your post screams "I want money to do stuff" which will get you escorted out of a loan office in record time. You'll need explicit details. I.E 2 car lifts, tools (1 screw driver, 2 jacks) etc)
Forecasts for how this money will help you and how it will be paid back (With 2 car lifts at 50% utilization at $85\hr I'll be generating $X in revenue and my expenses will be $X giving me a net profit of $X)
Collateral to cover the difference between the SBA guarantee and the amount financed
A personal guarantee
A lien against your business property (covers the loan balance and legal fees in the event of your business failing)
Depending on circumstances a 2nd mortgage on your house (Seen many banks require this, but I did not need to)


For reference I closed on my 3rd business loan in March and my proposal was 27 pages and took 2 months to get approved. I also had a 2 year standing relationship with the bank. Getting your first loan won't put you even remotely within shooting range of "buying a property." You should look to start in getting a business loan around $35K in the SBAs micro-loan program and in 1-2 years you can possibly consider getting a bigger loan.

The way this works is you need to find the SBA program that fits your needs, the SBA then gives the bank a bunch of guidelines that are financial and benchmark ratios that they use to assess your ability to run a business and pay your loan back. After that they say they'll back 50-85% of the loan. If you are in a program that backs say 50%, then the bank will demand collateral of 50%. Cash is valued at 100%, but for obvious reasons is rather silly to put cash down to get cash back, but it helps to build credit. Business assets are usually valued at 50% and accounts receivables are valued at 70-85%.

So for a $50,000 loan, I believe they do 85%. So you'll need to put down $7500, have $15,000 in business assets or a considerable amount of A\R.

Credit wise you'll need about a 650 empirica score.

You should expect your proposal and forecasts to land in the 5-10 page range. If you are not sure how to work on financials seek the advice of a CPA and friends of yours with business experience or degrees. Without coherent and solid financials your proposal will be shredded in seconds.

WWBIC in Milwaukee has classes on this stuff which will help you if you don't have a business background or formal business training. A CPA can also guide you through this process and will be connected to many banks. You'll need to shop around for lenders that thoroughly understand the SBA program because many large banks don't know the programs well. I knew the programs better than almost all the people I talked to. And when I finally found someone I felt that knew more than me about the programs we got down to business and closed on a loan.

If you have any criminal history it will be difficult. If you have ANY drug charges at ALL you will absolutely be denied. Remember that SBA programs are federal programs, so like student loans you are barred from them with drug charges. This is criminal history, not traffic tickets and vagrancy violation type stuff. There is also a background check before closing. If you have any red flags they'll require a character reference for a couple people who know you well. But in that case, a lot of banks just deny the loan.

If this seems like a lot, or overly detailed, you should take in mind this is how it is post 08. The way banks lend money is that they lend to basically 0 risk scenerios. With the SBA they follow all these rules so if a business fails, they're out nothing and they did nothing wrong. When they lend on houses they're backed by fred\fan lending programs. Banks don't take risk. They lend.

As brash as this can seem, this is a post I wish I had read before I did it all. It is extremely time consuming and emotionally draining the first run.

[spooln30]

Getting a business loan is an ordeal for sure. Do you own a home? If you don't need much your probably better off getting a loan against your house.

[LIL EVO]

Jeez that's a lot of work.

My plan earlier this year was to buy a second home with land and outbuildings. That looks like it will be easier.

[Nickerz]

Jeez that's a lot of work.

My plan earlier this year was to buy a second home with land and outbuildings. That looks like it will be easier.

It probably will, but take in mind this process you go through is extremely helpful. These are things that help you become a better business owner. There is a certain allure and advantage to when you first start out and basically do whatever you want and just pay your bills. But the curve on that ends REALLY quick. The hops from "hobby" business to "part time" to "full time" to "successful and growing operation" are all large jumps that take a long time. At some point the minor leagues become more work than they're worth.

Also don't play the zoning game. A local competitor will report you in no time. Make sure wherever you get this place you're allowed to wrench on cars for profit. My friends mom sold cakes and got reported by MULTIPLE competitors for selling out of her house. Pretty sad but that's how it is.

Anyone that you know that owns a business can help on this stuff. The paths most of us take are "different" but yet all similar.

[PureSound15]

I'm a commercial banker and I'm sure i I can help you. Shoot me a PM and tell me what you're trying to do - I'll point you in the right direction.

[spooln30]

You know if the loan doesn't pull through you could always do an reenactment of the movie "Heat". Damn, now since I thought about the movie I have to watch it again. It's been a while. Great flick, especially the ending.