Forums: Discussions for entrepreneurs and small business.

Good morning everyone, I am new and hopefully this forum can help me. I feel I am ready to start my business, but every time I go to the bank they, say they are not borrowing at this time.  (Little back round) I am trying to build a 6000sq. ft. Salon,(from the ground up) I have been working on this for just over 2 years and here is what I got so far.

I have my LLC

I have the business name and logo which is trade marked

I have my tax ID

I have purchased the property and still paying on it (I have been paying for 2 yr)

I got it re-zoned business property,  over a 1yr ago

I have drawings , that a builder did for me, and he gave me a price to build.

I have a 1/25 scale model built of the building.

I have had the land surveyed and have those drawings.

I have a 1inch thick business plan.

Credit scores are 803, 817, 821

But I can't get a loan, I am asking for $600,000 that is including the balance of the land loan (85,000) and the equipment as well (10,000)

Can some one help with Ideas, I am all ears!!!!

Are you always going to the same bank?  You will want to shop around with different lenders to see what is best for you.  Also, try visiting your local SBA or SCORE office as they may be able to point you in the right direction of some who is lending.

By chance, are you a woman or minority?  I ask this because there are additional funding options out there for you, if you are.  In terms of the business plan, if it really is 1 inch thick, that may be too much.  A lender doesn't want to read through all of that fluff.  Consider preparing a more concise business plan, think about 30 pages and also doing a short 10-15 powerpoint slide highlighting points in your plan.

Hope that helps!

Banks don't lend to startups - they want several years of a profitable track record first.  Even SBA guarantee loans are underwritten by banks - whihc just don't want to lend to new businesses.

Two options I see - 1) scale back and try smaller then build as your business as it grows. 2) Seek out non-bank lenders - we list several on our website that might be able to help you.

2b the best,

You have accomplished quite a lot so far.

There could be a number of reasons why your 'plan" isn't getting a positive response.

1. A one inch think business plan is probably overwhelming to the reader - so they may be missing the key points.

2. Combining a real estate construction with a new business may seem a bit risky to the bank

3. The amount you are seeking may be above their comfort level.

4. The bank you are talking to may not be the one to approach.

5. Your presentation and approach may need to be strengthened.

In order to get the capital you need, you may have to be a bit more creative and segment your funding requests.

If you would like to discuss your specific situation, feel free to contact me directly.

The banks I've talked to were more concerned with equity and collateral than the amount I was asking for. If you can supply 20-30% of the total start-up cost, and you can back it up with satisfactory collateral (accounting for deprecation), I can't see why a bank wouldn't help you at that point. That said, early on in my efforts, I was encouraged to visit my Dept of Agriculture for their Rural Development program. I was shot down because they only deal with big figure loans of six digits or more, and I only needed 15K. You're more in their ballpark. If your state has a rural development program, maybe it can help. The program is like the SBA's big brother. Handles issues too pricey and too high stakes for the SBA to tackle.

Good afternoon everyone and thank you for your imput, keep the ideas coming I am on other forums asking many questions, especially since I feel I am so close. Here is another question, I have asked on a another forum:

 I have the business land loan with Johnson Bank for just over 2 years, the payment is 671.00 month and I have been paying 800.00 every month to build credibility with them. You see my main bank GREAT MIDWEST BANK, I have used for almost 22 years doesn't do commercal business lending. I wish I would have known this back then, so now it's like I'm starting all over again, but as a positive the GREAT MIDWEST BANK's President, said I could list him as a reference with his personal number.

As for a lot of the suggestions about getting, private investors, family or friends. I haven't ask yet and really didn't want to go down this road as a first option, because I don't have answers to these questions in my head. The main one, what kind of interest do I pay them on their investment and the big thing I ask myself, let's say "as a Example" 2 people give me 50,000 each for 5yrs...
One as mentioned above, what is fare interest that people would want back on their money
and
Two, who would want to invest with realizing that you would get nothing for the first yr, because it would take about that just to get everything with a final approval from the city and the building built and running.

Any suggestions to these 2 questions before even approaching anyone about investing?????

You have actually already completed much more than many other aspiring entrepreneurs I know. If you already have a detailed business plan, try approaching private lenders or investors. I think they will be a better solution to your funding problems.

Contact me directly at kbernhardt@cprofit.com

Compound Profit provides working capital to small and medium sized businesses. This includes start ups. We have Unsecured Business Financing, Equipment Leasing, Small Business Loans, Merchant Card Advance and Processing and many other options and services.

Best Regards,

Keith

I know an investor/Loan lender. you can contact him on bobcolly22@aol.com

Regards,
Jello