...Having said this, your strategy to come up with the required down payment by taking out additional loans is actually quite common, but also dangerous because it will leverage your business quite a bit. The first couple of years, your business will be linked to your personal credit history and if all of you show significant debt, this will curb your ability to fund day-to-day operations and/or further growth based on credit.
Another route you and/or your consultants may want to explore is a loan or loan guarantee by the Small Business Administration (SBA). Working with them is a pain (as with most government agencies), but it may be worth it as they have a number of loan and loan guarantee programs tailored to small business owners...
Something didn`t work with the quote, so my comments start here.
Thanks for the advice. I`m looking at every alternative to using loans to supply equity. The essential problem I think is a mixture of impatience and necessity. I need to improve my career, and if you want something done right, you have to do it yourself. I can save 1,000 a month, but I would like to do this in under three years. I originally hoped to be up and running in 6-8 months. I think a year is what will actually pan out.
If I have one asset going into this, and being the frontman of the business - the owner - it`s my credit. I have zero complaints and a score of 726, in the "Excellent" bracket - top tier - according to Experian. I only recently checked for the first time. I knew I had no faults against me, because I feared using credit of any kind, lest I fall in a hole of debt. I found out I had about 8-10 good transactions listed, and a score to be proud of. You say bad personal credit can hinder the initial stages of a business. I pray the opposite is true. If bad credit can penalize, excellent credit had better reward proportionately. I doubt that`s the case. It seems when you have good credit, only your yearly income matters. If you have good income and bad credit, only your credit matters. Things only serve to disqualify you. But, I remain optimistic.
The SBA is one of the foundations of my plan to succeed. I`m not a home owner. I have no collateral. I`m honest with good credit, and that`s about it. The SBA claims to insure bank loans up to I believe 150,000, with expedited forms for loans 100,000 or less. I pray that this will help me overcome my lack of collateral. I have the strongest optimism for the success of my cafe plan. That said, I`m not perfect, and I refuse to wager the house of a friend or family member to do this. Unless I marry and get joint income of some sort, my current wages will never afford me a house worthy of collateral.
I`ve been looking harder at the idea of investors. I refuse to have another person with permanent part ownership of the cafe. I want to be able to say I own this business. However, some investors only look for a return on their investment and then allow themselves to be bought out. I don`t want a board of investors who can fire me. I`m more the dictator type than the democratic type. I`d prefer an SBA loan, but if an investor can offer the right terms, and agree to step aside after getting his/her fair share, that`s not something I`d oppose.
Making limitless possibilities much more limited.