Banking Advice

[dusthomps]

Guys,



I was looking for a little advice on going about a loan for a small business I'm thinking of starting. I know there are lots of people on here with valuable info so I figured I'd start here before actually going to the bank. I need roughly $150k to purchase a building and equipment and was wondering if I could get a loan for that amount if I brought in a co-signer who could put up collateral. I have good credit myself, but don't own anything worth that amount. Any other ideas would be appreciated. Thanks in advance.





Dustin

 

[GIT-R-DONE]

If you have a local university around, check to see if they have a small business administration there. We have one at a local university here and they do a lot to help you and point you in the right direction.



Don

 

[barkerdl]

Check with Banker!

Before shopping for a loan, check with a local banker. They have business reports that will show what the type of business you are considering typically makes per year, what the return on your investment will normally be, and whether there is a need for more of your kind of business in the local market. Your banker should provide this information to you free and be glad to do so.



Not a banker, just wish I had listened more closely to mine!



Dennis

 

[bighammer]

Hopefully the building and stuff you're buying are worth the loan. If you have enough for a downpayment, you shouldn't need a co-signer. (equity in your home?)



Sometimes having somebody else involved in your business makes things complicated. Do it yourself if you can but if you have to have somebody else involved, have the responsibities, liabilities, expectations, etc of each party spelled out. (For example, you don't want a provider of start-up capital to believe they are equal partner) I'm not a business person, just seen/heard a lot of stories... .



Good luck with it.

 

[dusthomps]

Thanks for the advice guys, hopefully by the end of the week I'll know a little bit more.





Dustin

 

[DaveN]

My .02

After having been involved in two failed attempts at business, I've learned quite a bit about failing. Some of my lessons-



1. You're much better off having a banker as a business partner than a "buddy with some cash. " If you were to put up money for someone elses business, would you want to stick your nose in it to make sure that you don't lose your money? Of course. And you would do this whether you knew anything about business or not. Get your money from a bank.



Most banks require a solid business plan, if it's good, then they will typically support your idea, sometimes regardless of your investment capital. Local banks are sometimes a little easier to work with, since they know what the area wants or needs. Like someone else said, go to your local chamber of commerce or college and they can help you with this. Either way it's a good idea to put together a business plan - it can help you to find out if you're going to make any money up front!!!



2. Pay your professionals. They is a reason they charge $50 an hour or more - they are worth every penny.



3. Don't hire family or friends because you think are doing them a favor, or you feel they might be loyal, or for any reason for that matter. When s*it hits the fan because your lazy sister in law doesn't want to show up for work one day, or she keeps screwing something up, you're losing customers and you have to fire her - it's easier to fire an employee than a friend or relative.



4. You're talking about buying a building, personally I would recommend a lease unless you're in an area that has large real estate gains, or you need the building because of some certain characteristics. If you get 8 months into it and decide to bail, you only have 4 months of payments to deal with rather than 29 years and four months... . that also frees up your startup capital to use on advertising, equipment, employees, etc. I wouldn't buy a building until the business can afford to make the payment based upon sales and income.



These are the top four that I've learned, all equally important.



Dave

 

[fkovalski]

Good comments, DaveN.



One thing I would add is: "Do not 'buy' your self a job. " If your only return is $10/ hr you'd be better off delivering pizzas without taking on the risk.