Forums: Discussions for entrepreneurs and small business.

I`m sure i`ll get into this more as I go along starting up my business but I just wanted to ask afew questions related to some things iv learned in the 10 steps to opening program.

I am guessing the BP is a tool that is first used to help you get a loan or convince others that your idea will hold water... or money in most cases.

What I`d like to know is if having a dergree in business makes any difference in getting a loan?


Every time i`v got a lone they just asked what I need it for and checked my credit. I am going wanting to be the only owner.

Does the quality of the BP have any impact on how good of a loan you can get or is it just going to go by my credit score?

I was going over the angle investor video and wasnt really sure what they do. It sounded like it would be better to get a bank loan to me but I may just have been misunderstanding what was being said. This may be a question for them but If they are getting back 5-10 times the amout of money they put into it I would think a bank loan would be cheeper by far. Say I need 500k and the angle gets 10 times what the put in thats 5 million. Its not adding up to me so i`m thinking I got something mixed up. Even for a long term loan from a bank I couldnt see anyone willing to pay 4.5 million in intrest.

What is the pluss for getting an angle investor over a bank loan?


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I strongly recommend you get a business degree or partner with somebody who has this knowledge.  There is much you don`t yet understand and no angel, bank or VC will invest their hard earned money with you if you are not knowledgeable of basic business strategy.

My answers to your questions.

1)  Yes, absolutely.  But not as much as available collateral, equity to be invested and above all the projected Interest Coverage Ratio (EBIT/Int Exp.)

2)  Yes the BP is very important.  The analysis will project Int. Cov. Ratio.  Credit Score is also important.  Your credit score can break a loan, but will not make it in and of itself.   

3) Angels will invest money without needing collateral or fancy ratios.  They come from heaven and give money to struggling entrepreneurs sealed only by a handshake.....and then they fly away and watch from a distance. 

For the most part banks invest in mature businesses with at least 2 or 3 years of profits.  Angels and VC`s invest in all the others.  Hope this helps.

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Travis Tschepen
Hibachi Bros. LLC

--My goal in life is to be as good of a person my dog already thinks I am.--

Yes it does thank you so much. Sounds like I need to get back into school.... Wonder if there is a grant for that *Wheels in head start turning*

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Many small business owners often ignore the key elements of a request for money when writing their business plan.  

Check out my blog posting "What Will A Banker Ask Me?" for more details.

 

Thanks for the link Mel really good stuff!

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