Forums: Discussions for entrepreneurs and small business.

I have been working for a while on getting the funding for my start up. After almost a year of working through all of the numbers, the business plan, etc. I came up with a nice rounded figure that would totally get me off the ground. This includes equipment, marketing, supplies, and a miscellaneous fund that could be kept as escrow for paying back on the beginning payments of the loan that I am looking to take out, just in case something comes up and I don`t make the initial funding to make full payments when I start (I like security blankets). Anyway, this amount was kind of talked down by the loan officer that I had checked with. At the same time it was really promoted that I could get a garanteed SBA loan through them for half the amount that I was looking for. To accept this, I would get the equipment needed and have some left for supplies. To accept this would mean a definate struggle to get the business on its feet and in the mean time would mean that I would have to continue in a full time job for at least a year. My question is; should I keep reaching for the stars or settle for the moon? One is garanteed, but I would be struggling through for a while and the other may take a while for me to get the funding, but once I get it, I can start completely. By typing this out, I may have answered my own question, but am interested to see how others in here would (or have) handled this situation.

Thanks in advance for the help.

Dear Engraver,

Great question, I would recommend two courses of action.  First go with the SBA loan which will at least get you started.  When you company is up and running and producing revenues, cash-flows and possibly profits it is much easier to secure additional capital.  Continue to "fight the good fight" with getting additional capital for your new project.  I personal feel you need to look at this situation as a "AND" not an "OR", you truly don’t have to do just one or the other.  You can do both, get the company up and running on a shoe string and second continue to increase you credit lines and balances.

I hope this helps.  Good Luck.

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

Erik
www.usspin.com
www.unitedbusinessalliance.com

I can see the dilemna you are in. And I admire you for having the wisdom to realize the dilemna.

I recall when I was handling business equipment leasing, similiar situations were presented to us by prospective clients looking for funding.

Now after many years of experience, I truly believe that "boot-strapping" your new venture might be the best way. I realized that going into debt never helped anyone but the lender. And secondly, can you show me anywhere in the Bible where it speaks of debt being good? (No, this is not a spiritual post ... but one of common sense.)

Going to the bank, or SBA, IMHO, is the last resort. Their interest is going to be to themselves ... not your success. And you do realize that you most likely will need to pledge personal assets as colateral, since this is a start-up.

My suggestion is to bust your butt over the next several months ... with 1 or 2 extra jobs to save the needed funding. Hold a garage sale (or 2 -3 garage sales), threaten to mortgage the kids (only joking) and SAVE, SAVE, SAVE !!

You`ll be amazed just how fast you`ll be much closer to your dream ... and much less stressed ... than attempting to do this strapped with a debt (loan) hanging over your head ... or a second mortgage.

If you are not sure I`m correct in my mindset ... go visit Dave Ramsey`s web site ... http://DaveRamsey.com , and ask him your question. I would be surprised if he said anything different than what I have posted here.

In fact here`s a quote from Dave`s web site ...

Debt

Myth: Debt is a tool and should be used to help create prosperity.

Truth: Debt is not a tool; it is a method to make banks wealthy, not you.

Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you`re in debt then you`re a slave, in the sense that you do not have the freedom to use your money to help change your family tree. According to a recent USA Today article about debt, 78 percent of baby boomers have mortgage debt, 59 percent have credit card debt, 56 percent have car payments.

It takes a lot of will, discipline, courage and help to slay the debt monster. But it can be done. Imagine how much you could put toward retirement if you just didn`t have a stinking car payment? This is how the wealthy build their wealth. Debt is really dumb. Welcome to the real world! 

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

Here`s another resource for you ... in fact, I plan on attending in December myself.

http://www.daveramsey.com/etc/cms/index.cfm?intContentID=281 7

Good luck with your decision.

Always go with your first instinct

I work with a Commercial Loan Broker that helps people just like you.

Go into business on your own terms or not at all.

the #1 cause of business failure is under capitalization.

E-mail me for his info if you`re interested

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

The Advice Guy
www.freeadvertisingadvice.org
Expert Advice For the Small Business Owner

Any info I can get will help right now. I appreciate the advice from you guys and have alot to chew on before making my final decision. thanks alot, I do appreciate the insight.