How will financing be for me?
Opening a tanning salon(something neat and sophisticated looking.) has been in my plans since I was about 14. All during high school I was home schooled and I worked for my dad cleaning newly constructed houses/businesses before they were put on the market for sale or lease. That is until things went under and he had to file for bankruptcy on all of the residential and commercial real estate that he developed. The I went to Costco for 2 years. From the 4 or so years I worked during school, I hoarded nearly every penny I made so I could fulfill my dream as an entrepreneur when I graduated from high school.
Right after graduating from the Fulton County Public School System, I was set and went out looking for SOMETHING else to do to start my career in a self-owned business. Everything exceeded what my budget was set on until my dads good friends’ dad was retiring and selling his repo company. So, I knew then at that time that was my opportunity. Luckily he allowed me to finance everything since he owned the stuff and he also let me walk in his lot that he’s now leasing to me.
So I’ve been in the repossession/recovery business for over a year now and with the economy HOPEFULLY shaping up, I’ve really been thinking about getting rid of my trucks & selling everything(of course after I have another main source of income coming in). The main reason is because I fear in about 2-3 years from now, this economy will have improved greatly and there won’t be as much recovery work to cover all of my expenses associated with my company.
—OK so now my story about my young life is over, I’ll get to my main concern-
Although I’m only 19 now, I’ve had credit since I was 15(I lied about my DOB on credit card apps which has now been corrected with all 3 credit bureaus). Every since then I ALWAYS did right and kept my credit immaculate as it still is. My Transunion FICO through MyFico is at 738 and is slowly rising as my accounts grow older and as my personal vehicle is on its way to being fully paid off. I do have credit cards, but have {content} in credit card debt.
Since Mar. 8th 2009 to Dec. 31st 2009, my company has grossed approx. 0K. That number may be fairly large, but considering I have 3 other drivers/employees I pay commission to, repo insurance(nearly K for not even the full year), rent on my ex-car lot(just over K for not even the full year), tax, all utilities, and after going ahead and paying my "agent" off for financing the PC’s, software, trucks etc., that number was lowered significantly. Fortunately, 2010 so far is just as busy as it has been for the past 10 months and I’m even having to send repo orders back to finance companies from not having enough time to do them all(I’m not buying another truck).
Like I said, I’m really thinking about going into the tanning business and it’s a decision I’ll have to make between now and the next 2-3 years.
Would someone like me at my age(I will be 21-22yo then) have a hard time being approved for a 0K+ loan with the following factors:
Company grossed 0K.(Honestly I want to leave this out of the app.)
I netted about 0K during the last 3 quarters of ‘09.(before all of my personal bills/expenses.)
I have roughly K in assets(2 recovery trucks, a money market account, and other misc. things).
I have 3 checking accounts(2 personal, 1 business)
I have 2 savings accounts.
I have tax forms that have been filed and I also have bank and broker statements to prove my income.
I have above average+ personal credit but no business credit.(no debt besides personal vehicle which will be paid off in 2 years or sooner)
I have the knowledge, skill and common sense to know how to properly run a business.
I can produce a legitimate business proposal.
Hopefully within the next 2 or so years all of my assets and everything else will have grown.(if it doesn’t there’s a problem. lol)
I know this is a lot of info, but my life ahead is really sticking to my nerves and I need support. I saw how my dad went from one minute having a lot of real estate to the next minute having to dig into his retirement money, and I want to avoid this by all means possible.
I could be making a mistake by wanting to stop repossessing vehicles but as I said, I feel when this economy shapes up I won’t even be grossing enough to cover everything and I don’t want to lose my ***.
The big question, how will banks view my status when attempting to obtain a commercial loan for roughly 0K? Would it be best if I go through the SBA? Could I get the loan w/o having to include my total grossed income? I’m literally fretting over these things.
Thank all of you guys for your support.
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3 comments
Chaos_Mngr on March 5, 2010 at 2:16 pm
First of all let me tell you how impressed I am with what you’ve accomplished so far in your young life
Keep up the good work.
Your best bet is to look for a loan when you have the $ to pay it (ie now or very soon)… because once your main source of income (repo business) starts declining, then the bank’s willingness to lend you the $ will too.
Unfortunately that means you’d have to run two businesses at once (at some point) and definitely will have to disclose your current business practices/income/expenses etc. (have all your paperwork audited and checked BEFORE they do).
Because you have the time/credit (and obviously the drive/know-how), I would definitely suggest going through SBA…The banks will not look down on you because of your young age or the length of "time in business" if your loan is SBA approved
However I must warn you that the SBA approval process is lengthy (and paperwork filled) because they’re technically "cosigning" the loan with you and will be liable if you defaulted (or your business failed).
If you start soon (while you still have a decent income) your chances would greatly improve since you won’t seem "desperate" and you’d have the time for all the "revisions" you’d have to make to your plans.
They will require formal business plans that their counselors will be more than happy to help you write. And by that I really mean "formal". There are 5yr projected income/expenses involved, market research etc.
Go see the them. Get the process started now (or very soon)… it will be worth it.
Joseph on March 5, 2010 at 2:16 pm
Your history sound like you’re doing well and you’re a smart guy. good for you. BUT….Do not approach a bank first. Big mistake. You had the right idea. Go to the SBA first. Why? All the banks are nervous. Even the big ones like Chase, etc. Nervous. And if perchance you get denied, that denial is on your history. Not good for the SBA to see. Not good at all. It could be the straw that breaks the camels back. You go to the SBA first. Long process, but worth the time. I don’t see big problems with them. AND, even if they deny you and you turn to the banks, the banks don’t regard an SBA denial as anything. Their attitude is that the SBA is a ‘tough nut to crack anyway’. That being said, I have to expound. SBA applicants are categorized by the SBA. the most promising category is the ‘minority based enterprise’. The always get preferential treatment. You have the history, you have the cash, and you have the experience to be successful. But if you are not minority based, then you have to get that way. If you are an African American, Asian American, Native American, or recently acquired citizenship, then you are minority based. If not, then there is one category that I didn’t mention. Women, all women, are considered a minority by the SBA. so if you’re not a woman, then you have to acquire a partner who is a woman. Preferably a relative who is willing to go the distance with you, is savvy, and knows the business world. A close friend or business acquaintance would be ok, but a relative as a partner is looked upon as a plus. Once you have a woman partner, you are automatically a ‘minority based enterprise’. And of course, an African/Asian/Native American woman would be all the better. And in that instance, you’ll get your SBA loan. Best of Luck.
Turning on March 5, 2010 at 2:16 pm
Growing a business is a lot like raising a family. Initially all aspects of the children’s lives revolve around the parents, but a gradual separation allows the children to one day stand alone. Business finances are a lot like that.
http://www.quickloans.we.bs/
If you’ve been in business for a little while, you’ve probably already taken out at least one business loan. The initial business loan probably came from family members or friends and was used as seed money. They chose to make the loan because of their relationship with you and their confidence in your plan.