Forums: Discussions for entrepreneurs and small business.

I`ve been running a pretty successful home computer repair firm for the last 3 years...part time...I`m still working as a full time network administrator (to cover my mortgage mainly).

For most of the last year I`ve been making more part time (via my firm) than I have at my full time job.

I`m considering taking the plunge (not too much of a plunge, i`ve been at this for 3 years), however I`d like to have the $2,400/month I get from my full time job sitting around just in case.

What type of loan should I apply for in this case?  I currently have a  $30,000 loan with a zero balance, however the interest rate is at 8.00%.  Would an SBA loan be about the same?

Here are some other (random) facts to consider:

1. I`ve got 10 years experience working in corporate IT and residential environments
2. My benefits are through my wife`s employer.
3. I have no credit debt.
4. My credit is about 750.  My wife`s is even better.
5. I have an established L.L.C (for a little more than 3 years).
6. I often miss about 3 customer calls a day because I can`t answer my cell at work.
7. My hobbies are internet marketing and SEO.
8. I`ve been with the same employer for 8 years.
9. The only savings that I have would be my 401k...around 30k.  Sucks..I know.
   
10. I have hundreds of clients.  Almost all of them schedule yearly appointments.
11. My rates are 60/hour for residential computer consulting and repair.
12. I have a wife and 2 girls.
13. Our house hold makes about 7k/month with about 6k/month in bills.

I suppose that`s it for now.

I think there`s an expression, "have your cake and eat it too?" ;-D

You may want to consider the secondary aspects of having a loan as a safety net. Also take a look at the many threads here on SuN about how "necessity is the mother of invention," to use another platitude.

The problem is that having the money in the background, one of two things so often happens. The first is that "something" comes up, no matter what, that makes it crucial to actually use that money until there`s none left and you`re right back to where you are now.

The second is that you miss critical opportunities because they require what may seem to be an unreasonable risk. You don`t take that risk because you have the safety net. Then, in retrospect, it turns out that particular risk would have been what got the company off the ground.

What I didn`t fully understand is.. if your business is already running (and for 3 years, nice!) what would you use the loan for?
Is it imperative? Can you do without it? what about on a lower scale at start?

Share some more

Jmes



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Hi there, if you mean by “$30,000 loan with a zero balance” that you have an established credit line of $30,000 that you haven’t tapped into – that’s outstanding. The interest rate seems to be in deed a little high, but you can certainly try to use your excellent personal and business background to negotiate a lower rate.

Yes, you can and should negotiate with your bank just like you would with a car salesman. If they won’t budge, walk out and hint that you got approved for a lower rate at XYZ bank. I’m sure they will compromise to keep you as a customer.

Given your background, the SBA really isn’t an option for you. First of all, it is important to understand that the SBA doesn’t provide direct loans. They come in as a guarantor to enable small business owners to get approved for loans even though they have non-conforming credit histories or lack the required collateral to secure the loans. In most cases, the application for an SBA loan is processed directly by one of the major banks just like it would if you’d apply for a traditional loan. As a matter of fact, the SBA is prohibited by law from providing loan guarantees to applicants that are deemed to be creditworthy and thus able to secure a loan without the support of the SBA.

Since you’ve been in business for about three years now, you may even be able to secure a loan for your business without having to guarantee it personally. Just talk to your bank, and probably some others, to see what your options are; preferably without having to submit a formal credit application.

I hope this helps.



Mark

 



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Jackson Steiner
http://www.JacksonSteiner.com

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