ForumsStarting a Business

Jd, Tell us more. You said that you have never applied for a business loan. O K.
Have you applied for any CREDIT in the past?? Do you own a Real Estate, Stocks, a Car.
I guess I am trying to find out your credit history.
Sounds like you could be getting in on the ground floor at a bargain. When will you need the Money??
Do you have a Business and Marketing Plan. Banks need to see how they are going to get paid back.
LUCKIEST

SBA loans are normally available up to 80% for qualified situations. In addition SBA allows you to include working capital in the loan. There's a fee (I believe 3%) in addition to the interest.

What's it take to qualify? The business must be in business long enough to have two years of tax forms. It must show a positive cash flow adequate to pay the debt service, plus a reasonable salary for the new owner, plus approximately 20% additional. The prospective owner must have experience and knowledge adequate to profitably opereate the business. And the prospective owner must have a "reasonably" good credit score.

Franchises with very good success records skew the odds positively.

You should expect to fully explain what qualifies you to run a start up business in a way it would become profitable, when it would become profitable and how you'd repay the loan if the business did not become profitable. The purpose of the loan on the part of the lender is to make money with the money they lend. They want to know if both the business and you have the potential for profit. It's a game of prove it - the high stakes are on you either way because you'll carry all the responsiblity for repayment.

Make sure you're ready to be a business owner. Fully understand how the business model you're choosing works within the market place you'll operate it. Determine how long it will take to make a profit which comes after all overhead, etc. including loan repayment and a salary for the role you're playing running the business day-to-day.

Getting a good deal on the cost of the investment to acquire the franchise is the least important issue when it comes to a loan. Solid projected facts on creating sales revenue, covering the start up captial costs and operating expenses plus weathering cash flow storms is more important. Plus, of course, your personal credit score and assets to cover the loan should the business fail to meet it's loan payment commitments.