Small Business Loans and Grants-advice needed

[TBBills Fan]

Hello I am currently in the early stages of opening my own business.  We will have a location and a physical product we are selling.  Currently putting together a business plan

 

 

As a first timer, I was hoping my fellow Bills fans could give me advice..."dos and donts'" with starting a small business..specifically things I should be aware of or try to have ready if my intention is to get a Small Business loan, grant or investors.

 

I am going to go with a S-Corp, and work in the industry  so I have familiarity with the vendors I would need and things of that nature

 

Really it comes down to securing enough capital to have the bills paid for 6-12 months as the company starts.  The good news is the actual product is provided via consignment so we are looking at rent, payroll, supplies, licensing, marketing etc as our cost.

 

I am aware this is pretty generic, I have been doing some research online as I try to get all my ducks in a row, so any insight, help or advice you are willing to share would be awesome!

Thank you!

Edited November 24, 2020 by TBBills Fan

[teef]

so it sounds lie you just need a working capital loan?  no brick and mortar involved.  that may make it a bit easier.  

 

i think a lot will have to do with the product, if you've actually made a profit on it, and whether you have collateral.  my first major loan was a few years out of school, and i really had nothing other than a small home.  i was given the loan, but at that time my interest was 8.25%.  there may be rules to the loan such as you can only pay interest the first year, you can't prepay for a certain amount of time, and you can't transfer you loan for a period of time.  for that first loan, i paid it on time religiously for a couple of year, then sold it to another bank.  the rate went to 4.25%, and saved me a ton of money.  

 

just be ready for them to undress you financially.  they'll want to know where every penny in your life came from over the last few years.  shop the loan out as well.  you'd be surprised the ways that a loan can be structured.  you'll find what's best for you.

 

also, it depends on the size of the loan, but be ready to take out life insurance to secure.  if you take part in certain recreational activities, you may want to back off for a while.  they'll do a physical, and the screen is usually part of it.  

 

i'm not sure if this is what you were asking, but i'll try to answer any questions i can.

[Teddy KGB]

Get your presentation ready for the sharks.  
 

 

[Orlando Buffalo]

3 hours ago, TBBills Fan said:

Hello I am currently in the early stages of opening my own business.  We will have a location and a physical product we are selling.  Currently putting together a business plan

 

 

As a first timer, I was hoping my fellow Bills fans could give me advice..."dos and donts'" with starting a small business..specifically things I should be aware of or try to have ready if my intention is to get a Small Business loan, grant or investors.

 

I am going to go with a S-Corp, and work in the industry  so I have familiarity with the vendors I would need and things of that nature

 

Really it comes down to securing enough capital to have the bills paid for 6-12 months as the company starts.  The good news is the actual product is provided via consignment so we are looking at rent, payroll, supplies, licensing, marketing etc as our cost.

 

I am aware this is pretty generic, I have been doing some research online as I try to get all my ducks in a row, so any insight, help or advice you are willing to share would be awesome!

Thank you!

I used to work in small business finance and with your generic information you have two main sources of possible funding, a straight loan or factoring. Factoring will process your recievables and give you cash to work with until you get fully paid. One of the most successful companies I helped with factoring, because it helped them scale up quickly, was a property maintenance company that started with small properties like strip malls and within 3 years had a contract with CBRE on a bunch of their properties. The money coming in from the funding though is based on what your business has on contract already. The biggest issue I saw was businesses signing contracts for 4million a year in sales and only doing 50k which allowed factoring companies to charge big fees. The banks will need a large amount of paperwork but their line of credit is solid and steady. The issue with banks is it usually makes scaling up hard. This is all real advice but I have been out of this business directly for 8 years. Also if you are in Tampa I worked in Orlando and know a good company for factoring of that is what interests you.

[EmotionallyUnstable]

Do: follow your dreams

Don’t: ask stranger for advice 

[T&C]

What is the product or service?

[Augie]

1 hour ago, T&C said:

What is the product or service?

 

Isn this where coke and/or hookers gets mentioned? 

 

My bad if I got that wrong! 

 

Seriously, best of luck to the OP. A bit more info might lead to a bit more helpful info. 

[TBBills Fan]

17 hours ago, teef said:

so it sounds lie you just need a working capital loan?  no brick and mortar involved.  that may make it a bit easier.  

 

i think a lot will have to do with the product, if you've actually made a profit on it, and whether you have collateral.  my first major loan was a few years out of school, and i really had nothing other than a small home.  i was given the loan, but at that time my interest was 8.25%.  there may be rules to the loan such as you can only pay interest the first year, you can't prepay for a certain amount of time, and you can't transfer you loan for a period of time.  for that first loan, i paid it on time religiously for a couple of year, then sold it to another bank.  the rate went to 4.25%, and saved me a ton of money.  

 

just be ready for them to undress you financially.  they'll want to know where every penny in your life came from over the last few years.  shop the loan out as well.  you'd be surprised the ways that a loan can be structured.  you'll find what's best for you.

 

also, it depends on the size of the loan, but be ready to take out life insurance to secure.  if you take part in certain recreational activities, you may want to back off for a while.  they'll do a physical, and the screen is usually part of it.  

 

i'm not sure if this is what you were asking, but i'll try to answer any questions i can.

 

 

Thank you that helps.   I will actually be brick and morter, as I need the products on display for clients to choose.  In terms of cost, the Manufacturer provides the product on consignment, so there is no up front product cost.

 

So basically with traditional small business loans they will be looking at my credit and assets to determine eligibility?   Do they look at profitability and allow no collateral?  If the Company does not exist yet as it is starting up will they even consider profitability?  

 

Investors or Investment companies?  Generally better or worse?  Does it matter?

 

14 hours ago, T&C said:

What is the product or service?

 

 

Portable Sheds and Carports

14 hours ago, EmotionallyUnstable said:

Do: follow your dreams

Don’t: ask stranger for advice 

 

 

 

Thank you I am!

 

However I disagree.  Information and knowledge is important, and listening to everyone who is willing to say anything has value.  Its up to me to sort through and decide how I proceed.  

 

Last time I checked there is no human being on earth that is perfect so I dont mind hearing from others.  After all, if I knew it all Id already be rich and retired.  

[TBBills Fan]

14 hours ago, Buffalo Timmy said:

I used to work in small business finance and with your generic information you have two main sources of possible funding, a straight loan or factoring. Factoring will process your recievables and give you cash to work with until you get fully paid. One of the most successful companies I helped with factoring, because it helped them scale up quickly, was a property maintenance company that started with small properties like strip malls and within 3 years had a contract with CBRE on a bunch of their properties. The money coming in from the funding though is based on what your business has on contract already. The biggest issue I saw was businesses signing contracts for 4million a year in sales and only doing 50k which allowed factoring companies to charge big fees. The banks will need a large amount of paperwork but their line of credit is solid and steady. The issue with banks is it usually makes scaling up hard. This is all real advice but I have been out of this business directly for 8 years. Also if you are in Tampa I worked in Orlando and know a good company for factoring of that is what interests you.

 

I would LOVE to hear more about this and if you have a contact that would be awesome!  Thank you

 

 

13 hours ago, Augie said:

 

Isn this where coke and/or hookers gets mentioned? 

 

My bad if I got that wrong! 

 

Seriously, best of luck to the OP. A bit more info might lead to a bit more helpful info. 

 

 

I dont claim side hustles on my taxes

[teef]

1 hour ago, TBBills Fan said:

 

 

Thank you that helps.   I will actually be brick and morter, as I need the products on display for clients to choose.  In terms of cost, the Manufacturer provides the product on consignment, so there is no up front product cost.

 

So basically with traditional small business loans they will be looking at my credit and assets to determine eligibility?   Do they look at profitability and allow no collateral?  If the Company does not exist yet as it is starting up will they even consider profitability?  

 

Investors or Investment companies?  Generally better or worse?  Does it matter?

 

 

 

 

you'll likely end up filling out personal financial statements.  they'll want to know income of you/spouse, debt remaining on home, cars, credit card, school loans, etc.  they'll need to know money in accounts and 401k, as well as any other income, (from rentals an such).  once you've filled out one, the rest are all pretty similar.  

 

i doubt they'll give you a loan with no collateral, but it can happen.  other than my home and school loans, i've taken out 2 other large loans.  the first was to buy my business, the second was to build a building.  for the business, it had already existed, so we were able to show federal tax returns over 3 years for production.  the bank only had to take a chance on me keeping up with that production.  there was no collateral for that loan, but that was the 8.25% interest, and i had to stay with that bank for 3 years.  fortunately for my profession, it's very easy to get a loan.  rarely do we default.  

 

the second loan was a bit different.  this was for my building, and typically they do want you to cover a portion of the loan/build. i don't remember the percentage, but i think it's in the 10-20% range.  i bought the property cash, and then developed the plan for the building with the architects and engineers.  i even had the builder picked out, so when i approached the banks, they were happy that work had been done, and allowed my to use that as my "down payment"  portion of the loan.  typically people will take loans out for the land and development.  

 

i'm curious to how they deal with a company that does not yet exist.  i'm sure they'll want to see a plan with projections, (they even wanted assumed  projections of my profits after i moved into the building).  they may want to see some financial coverage from you since there's risk involved, and banks are going to cover themselves. the best thing you can do is have a good accountant  as well.  they can walk you through the troublesome steps.  the loan for my building is covered by Live Oak.  they've been great every step of the way, so it's worth giving them a look.

Edited November 25, 2020 by teef

[TBBills Fan]

14 minutes ago, teef said:

you'll likely end up filling out personal financial statements.  they'll want to know income of you/spouse, debt remaining on home, cars, credit card, school loans, etc.  they'll need to know money in accounts and 401k, as well as any other income, (from rentals an such).  once you've filled out one, the rest are all pretty similar.  

 

i doubt they'll give you a loan with no collateral, but i can happen.  other than my home and school loans, i've take out 2 other large loans.  the first was to by my business, the second was to build a building.  for the business, it had already existed, so we were able to show federal tax returns over 3 years for production.  the bank only had to take a chance on me keeping up with that production.  there was no collateral for that loan, but that was the 8.25% interest, and i had to stay with that bank for 3 years.  fortunately for my profession, it's very easy to get a loan.  rarely do we default.  

 

the second loan was a bit different.  this was for my building, and typically they do want you to cover a portion of the loan/build. i don't remember the percentage, but i think it's in the 10-20% range.  i bought the property cash, and then developed the plan for the building with the architects and engineers.  i even had the builder picked out, so when i approached the banks, they were happy that work had been done, and allowed my to use that as my "down payment"  portion of the loan.  typically people will take loans out for the land and development.  

 

i'm curious to how they deal with a company that does not yet exist.  i'm sure they'll want to see a plan with projections, (they even wanted assumed  projections of my profits after i moved into the building).  they may want to see some financial coverage from you since there's risk involved, and banks are going to cover themselves. the best thing you can do is have a good accountant  as well.  they can walk you through the troublesome steps.  the loan for my building is covered by Live Oak.  they've been great every step of the way, so it's worth giving them a look.

 

 

Yes I do have someone that I trust to help me with the accounting aspect. The fact that I am not established definitely adds additional challenges.  I have projections and looking at the current production I am personally doing now, this business will be profitable.  Thank you for your insight!

 

[Augie]

25 minutes ago, teef said:

you'll likely end up filling out personal financial statements.  they'll want to know income of you/spouse, debt remaining on home, cars, credit card, school loans, etc.  they'll need to know money in accounts and 401k, as well as any other income, (from rentals an such).  once you've filled out one, the rest are all pretty similar.  

 

i doubt they'll give you a loan with no collateral, but i can happen.  other than my home and school loans, i've take out 2 other large loans.  the first was to by my business, the second was to build a building.  for the business, it had already existed, so we were able to show federal tax returns over 3 years for production.  the bank only had to take a chance on me keeping up with that production.  there was no collateral for that loan, but that was the 8.25% interest, and i had to stay with that bank for 3 years.  fortunately for my profession, it's very easy to get a loan.  rarely do we default.  

 

the second loan was a bit different.  this was for my building, and typically they do want you to cover a portion of the loan/build. i don't remember the percentage, but i think it's in the 10-20% range.  i bought the property cash, and then developed the plan for the building with the architects and engineers.  i even had the builder picked out, so when i approached the banks, they were happy that work had been done, and allowed my to use that as my "down payment"  portion of the loan.  typically people will take loans out for the land and development.  

 

i'm curious to how they deal with a company that does not yet exist.  i'm sure they'll want to see a plan with projections, (they even wanted assumed  projections of my profits after i moved into the building).  they may want to see some financial coverage from you since there's risk involved, and banks are going to cover themselves. the best thing you can do is have a good accountant  as well.  they can walk you through the troublesome steps.  the loan for my building is covered by Live Oak.  they've been great every step of the way, so it's worth giving them a look.

 

I spent a couple decades in banking before getting into real estate (where I was still dealing with bankers). This all sounds spot on! 

 

It will be difficult to get an unsecured loan for a start up. If there is equity in a home or some other asset(s), they will probably require that as collateral (along with inventory, depending upon the nature of the business). It’s also highly likely they require a spouse to also guarantee the loan (making it easier to go after all assets if things don’t go well). If their is a relative or friend with strong financials to also guarantee that may open more options.

 

The lender may try to go thru the Small Business Administration (SBA) which gets government backing to help small businesses. We used to love doing these as you can sell the guaranteed portion and get a terrific yield. Unfortunately, SBA loans were in the program for a reason, and they were often the problem child for bankers. 

 

Best of luck in your plans and let us know how it goes!!! 

 

 

.

Edited November 25, 2020 by Augie

[teef]

37 minutes ago, TBBills Fan said:

 

 

Yes I do have someone that I trust to help me with the accounting aspect. The fact that I am not established definitely adds additional challenges.  I have projections and looking at the current production I am personally doing now, this business will be profitable.  Thank you for your insight!

 

showing current production will be the trick.  good luck.  let me know if you have any questions.  my business knowledge is limited outside of what i do, but always let me know.

36 minutes ago, Augie said:

 

I spent a couple decades in banking before getting into real estate (where I was still dealing with bankers). This all sounds spot on! 

 

It will be difficult to get an unsecured loan for a start up. If there is equity in a home or some other asset(s), they will probably require that as collateral. It’s also highly likely they require a spouse to also guarantee the loan (making it easier to go after all assets if things don’t go well). If their is a relative or friend with strong financials to also guarantee that may open more options.

 

The lender may try to go thru the Small Business Administration (SBA) which gets government backing to help small businesses. We used to love doing these as you can sell the guaranteed portion and get a terrific yield. Unfortunately, SBA loans were in the program for a reason, and they were often the problem child for bankers. 

 

Best of luck in your plans and let us know how it goes!!! 

thank you so much for bringing this up.  an SBA may be very helpful in navigating this.  

[TBBills Fan]

1 hour ago, teef said:

showing current production will be the trick.  good luck.  let me know if you have any questions.  my business knowledge is limited outside of what i do, but always let me know.

thank you so much for bringing this up.  an SBA may be very helpful in navigating this.  

 

 

Thanks Teef!!!!

[Seasons1992]

18 hours ago, EmotionallyUnstable said:

Don’t: ask stranger for advice 

 

How dare you think that @teef is a "stranger" on an Internet forum. He's one of our own!

[TBBills Fan]

2 hours ago, Seasons1992 said:

 

How dare you think that @teef is a "stranger" on an Internet forum. He's one of our own!

 practically a brother to me

 

going way back to when we were both posting in the But back in the day

 

Edited November 25, 2020 by TBBills Fan

[4_kidd_4]

Good luck OP, I feel ya. Been working on a Tavern plan for a long time. Working with the SBDC at NCCC, fantastic resource if you are in the WNY area.

 

Was planning on pitching the bank this past April. Lease in hand and everything. Thank goodness I wasn’t ready in February. 
 

I’ve already dropped some cash on architect/floorplan drawings, some graphic design as well as bits of R&D. This will count towards the 20% “up-front” portion of a small business loan.

 

I have a killer location and amazing, patient landlords that are putting a ton into the building as well as my individual space. Small joint, aprox 42 capacity indoors and a sweet front patio that I’m hoping to seat 30-40 more for summer/festival season.

 

Being a startup the bank definitely wants to see projections, as mentioned, as well as the detailed personal financial info that’s also been mentioned. I plan to keep the day job  until we start turning a profit. Good look for the lenders.

 

Obviously Covid has thrown a huge wrench into all of these matters. I’m currently working on a second set of projections to reflect reduced capacities. It ain’t pretty.  Had to add an entire covid section to my plan; safety protocols, and the associated cost, etc.

 

I can’t bail on this now. The location opportunity and the landlords will never be this ideal again. I have been working this plan for 5+ years, it’s my dream and my passion. Hoping to sign early next year and be ready to turn the key in spring. Nerve wracking!

[ICanSleepWhenI'mDead]

If you are currently employed, think about asking your credit card companies to increase your credit limits on your personal credit cards.  Hopefully you won't need to access personal credit to keep the business afloat, but lack of startup capital to cover costs before the business gets established kills some startups.  You can always decide later whether you want to use your personal credit cards if that becomes the last resort for additional $$.

[cwchze]

I owned my own business for twenty years. Owned the building, large retail/hardware nursery, landscaping, repair etc. Lots of inventory and equipment. Here’s a few points to ponder.

Financing is one of the most important parts to stay afloat. No bank is going to finance anything without collateral. They will steer you to sba because their exposure will be limited. So expect them to put a second on your home. Looks like you need a working capital loan with a line of credit. The issue they will have is you don’t own the inventory that is why they will collateral anything you have equity in.

sba used to have a nice express package that I used for an additional line of credit. Stay away from online lenders or credit card financiers. You probably won’t have receivables so factoring is not an option.

2. Look for ways to generate additional revenue either add on fees or recurring. If you are doing car ports. Charge for set up and delv. Build into price. Maybe get into tent rentals etc.

Best advice I ever received was from a long time owner who told me. Don’t care the size of your business, cash flow is king. Follow that rule and you will be fine.

lastly. Have an exit plan even if it’s 20 years from now. I subdivided my property and sold off parcels. One to a credit union and the rest to a developer when a grocery chain built adjacent to me. 
It is a great ride.. enjoy and good luck