Forums: Discussions for entrepreneurs and small business.

I am an aspiring businessman with dreams of owning a recording studio/media studio.
I have explored some startup capital options (such as the SBA) but it seems that my executive summary (business plan) is too forward thinking for the SBA. Are there any other funding avenues to look at when trying to grow a business?

Any help would be greatly appreciated...

Sean,

In essence, you can bring capital into a business via have debt or equity or a combination. Within those 2 broad categories, there are numerous approaches depending upon the specific circumstances and objectives. We’ve identified 40+ and I’ve seen some claims of over 100.

 

Most first time entrepreneurs start with the local bank or SBA (who is not a lender) and most get a response similar to the one you got – although the “reason” given may vary.

 

Our experience says that (just like getting customers) it is important to present your deal to those who value the “benefits” you offer and to do it in a clear, concise and compelling manner.

 

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Hi Sean,
I would be happy to take a look at your information you submitted to the SBA in an effort to assist you. I started working with packaging SBA loan requests post 9/11 for the Economic Injury Disaster Loan. This was a loan, in addition to SBA`s regular programs (7A, 504, most common) for businesses adversely affected by 9/11. At this time I worked with many SBA bankers (still do) and the SBA, SBDC (small biz development centers).
Most often times a loan request is denied at first glance, but when taking a closer look you may be able to put together a viable loan package and only then submit when the package is complete. There are many variables and reasons as to why a loan request is denied, and perhaps with a closer look, a proper and complete package and the bank (sba lender) who would possibly fund a deal such as yours, all may be sucessful in terms of getting a loan. Start ups are difficult. For example you need a capital injection of 25-33% of what your loan request is...so for many this is a where they get "stuck" so to speak in acquiring loan capital. Forward thinking, and progressive companies can definitely be okay as long as you met the requirements needed to acquire a loan in the amount you are searching for and where it makes sense in terms of having legitiamte claims (data, proof from other companies already operating/comparison to industry financials etc) to back up financial projection assumptions for example.  Also having benchmarks (companies such as yours, indirect or direct competitiors and what their financials looked like when in the seed or start up phase).
So first it is best to see what you would need for SBA to look at your deal (loan request) favorably...if it will take to long for you to get there or it just isnt possible, then pursue investors or as of course as stated above a combination of debt and equity or equity. One thing you would need to do if seeking investment capital or loan capital is to complete a minimum of 3 years financial projections (cash flow/profit and loss) to better gauge a pre money valuation of your company....
Just some info, that might be helpful. Feel free to send me a message if you would like some assistance.
Best,
Lisa


-------------------------

lisa@theideaanalyst.com

Sean:

While you`re filling out those long loan funding avenue forms ... oh, and they`re long forms too and many of them ... And because you may also eventually deal with a few objections along the way ...

Remember these business thoughts... A few to chuckle by...

There has been opposition to every innovation in the history of man, with the possible exception of the sword.
There is absolutely no substitute for a genuine lack of preparation.
There is nothing so habit-forming as money.

A penny saved is an economic breakthrough.

Good Luck in Your Financing & Funding Avenue Adventures!

Tony Russ
 Design Ideas Marketing Associates

 www.designideas.tv

 

I have a verbal agreement to buy a mini storage facility @$1,350,000. The list was $1,600,000. Annual gross for 3yrs is $225,000 - net $140,000. Nearly 90% occupancy. Obviously I think it has potential. My problem is I have no money for downpayment after being laid off months ago. My FICO is still around 700. Can you expalin "backing into" a loan. Any ideas on how to get this done? I am a minority disabled veteran.
Thanks

qdog112

Assuming you borrow $1.3M at 8% for 10 years - the annual payments will be $189,000. The gross income of $225 will barely service the debt.

With 90% occupancy already - the income appears to be fixed.

I think you`ll need a "plan" to show lenders how you are going to increase the gross revenue and/or reduce the expenses.

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Thanks for your response. @ 10 years you are right. My hope is to get terms in the 6% range for 20-25 years decreasing the annual payments. What do you think?

The annual payments for 20 and 25 years are nearly the same

• 20 years @ 8% = $130,476
• 25 years @8% = $120,376

To get that length of loan - I would suggest that you start by talking with an SBA lender to see what they can do for you. It`s possible if there is real estate involved in the purchase - which I assume is true in your situation.

However, I would still suggest having a plan for increasing the revenue & profits before I have a serious talk with any lender.

Good luck.

Robert Johnson

 

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Thanks Robert. I have contacted SBA and others for possible lending sources. Is there a particular reason why you use 8%? Is that typical for a loan of that size? It seems high to me, but I am new to this.

You`ve been very helpful.

Hi qdog112,
Yes I agree with Robert. One of biggesst things you need to prove is capacity, otherwise can you service the debt. and can you "prove" this through your business strategy and do your projections for future operations substantiate this claim. The norm for SBA lending... prime + 2.25 - 2.75%.
I can review your information for you and let u know if you qualify or can in future if you meet certain requirements. I work with SBA lenders who each have different parametets concerning what they would fund as bank. Sometimes as it stands you may not qualify for SBA at the moment, but you may be able to position your company to be able to do so at some point in the future by legitimatly meeting basic requirements. Collateral varies, I have seen deals funded with 70% collateral if everything else is strong.
Lisa
lisa


-------------------------

lisa@theideaanalyst.com