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Thread: Bank loans...

  1. #1
    Join Date
    Jan 2012
    Location
    Massachusetts
    Posts
    154

    Default Bank loans...

    How many of you have gone through the bank? We are almost done with our business plan and hope to sit with the bank by the end of the month. I wanted to get some insight on the process and what kind of questions they ask you.... I am quite nervous, so i'm hoping you guys can help me out so I can be more prepared.

    Thanks!

  2. #2
    Join Date
    Aug 2010
    Posts
    549

    Default We did.

    My business plan was very detailed. I used the groomers in a box plan, and the guide from SCORE. It was the volume of a book. I do not remember being asked any questions. They took it, called back in about 4 weeks, and said we were approved. The only thing they wanted changed was to match the length of our loan to our lease, including rights to renew the lease. We also had to sign over the equity in our home to the amount of the loan, as well as our life insurance policy, they getting the amount we owe before we get anything.

    Good luck!

  3. #3
    Join Date
    Jan 2012
    Location
    Massachusetts
    Posts
    154

    Default

    Oh! I was under the impression it was going to be like an interview. Unfortunately we do have a house, just rent ... We're hoping someone will want to invest in a younger entrepreneur !

  4. #4
    Join Date
    Jun 2008
    Location
    San Clemente, CA
    Posts
    720

    Default

    I hate to sound negative, but unless you have some sort of collateral like a house, insurance policy, etc you are probably not going to get a loan. I hope I'm wrong though....

  5. #5
    Join Date
    Jan 2012
    Location
    Massachusetts
    Posts
    154

    Default

    Hi VIP. I know, we are totally aware this will probably not go through and we are prepared to fund it ourselves... But its worth a shot right? Lol

  6. #6
    Join Date
    Oct 2011
    Posts
    2,731

    Default

    I'm curious. If you can fund yourself, why not do it? An unsecured loan to an unproven businessperson may have a significant interest rate. Please make sure you do the math and are aware of the cost of the money. Loan money is not free -- you're buying the loan, in a sense.
    Do you have savings? Any assets? If not, I would not take on a loan because already you're on the edge. Sorry, but I'm speaking as someone who ignored these sorts of things in the past.

  7. #7
    Join Date
    Jan 2012
    Location
    Massachusetts
    Posts
    154

    Default

    Hi Emma, I could do it without a loan.. But would have to start at the bottom and be very conservative with everything we buy. As I'm sure everyone would like to, we did the business plan out as if the bank was going to give us the loan and we could get everything that we wanted. If you don't mind me asking, how much did it take you to get yourself started?

  8. #8
    Join Date
    Jan 2012
    Location
    Massachusetts
    Posts
    154

    Default

    Maybe I should just start with our savings? That thought stresses me out!!! My boyfriend can get at-least a 10,000 loan and we have about 9,000 saved up. So 20,000 give or take... I just get concerned thinking about my rent, car payment and insurance every month how did you guys do it?!

  9. #9
    Join Date
    Mar 2011
    Location
    Madison, Wisconsin, United States
    Posts
    1,100

    Default

    We ended up taking out $10,000 but we had to put our car up as collateral. We have excellent credit (over 800), own a home, and have a pretty good financial hold on everything. Banks are being very careful right now, so it wouldn't surprise me if they do turn you down. If you are going in for an interview with them, which is what we did, they will give you a detailed list of everything they will want from you in an application, and will also let you know ahead of time what the outcome may be. Also keep in mind that some banks, like the one we had gotten our loan from, are closing all small business accounts and calling in the loans. A lot of banks are restructuring right now so they may have that going on too. Are you going to open a home shop or use a commercial space? If doing it at home, I'd say use your savings and be very conservative. You can set up a pretty good shop for a little money if you do your research. Now leasing or buying a commercial space, that would scare me. Business will be slow at first, painfully so, and you might go through your savings in a few months and then have nothing. Also, watch your advertising. We did it and got nothing out of it-wasted money big time. Get out and meet people and literally put your business card in their hand, that makes more of an impression than seeing an ad in the paper any day. Good luck to you, and don't get discouraged...get creative!

  10. #10
    Join Date
    Oct 2011
    Posts
    2,731

    Default

    I think it would be a great idea for you and your boyfriend to meet with a SCORE counselor or go to some free small-business startup classes, if there are some in your area.
    The fact that you are going into business with a boyfriend adds an extra element. What if your relationship does not last? If the loan is in your boyfriend's name, would he be the one who has ownership of the shop at that point? Have you discussed this and come to an agreement? What if you build up the business and then the relationship tanks?
    What's wrong with starting small and being conservative with purchases?
    The reason I am being a bit hard on you is that you don't have much margin for error given your financial situation, unless one or both of you is going to continue working at another job during the start up period.

  11. #11
    Join Date
    Jun 2008
    Location
    San Clemente, CA
    Posts
    720

    Default

    You should have at least 6 months of living expenses saved up, plus some extra money for emergencies.

    It's good to start at the bottom and be conservative with what you buy. Buy quality equipment, but really think and discuss all of your purchases.

    You might also want to consider a credit card that has 0% interest rate for 6 months or a year. That could help you get started.

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