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9 Replies Latest reply: Jan 21, 2012 4:21 PM by CorpCons08 RSS

Starting a dry cleaners

Intrakate Novice
Currently Being Moderated

Hello everyone,

 

Just got bacholers in accounting 5 months ago. Discovered that the accounting profession might not be for me after numerous failed interviews with CPA firms and my declining interest in the field. I didn't really want to work the books at a small company so I decided to start a dry cleaners drop off / pick up store. Already found a place to rent out. My cousin is in the business and he offered a very low rate to clean my future customers' clothes. My parents say they will help me out even though they didn't want to at first. After doing analysing the costs, I figure I will need around 100k including first 3 months rent and security. Just formed a LLC today and its going to be taxed as an scorpration. My parents can write the company (not to me) a 40k check as a no interest loan. I also have a friend who works in the small business loans department at a bank of america branch. He told me I can borrow a 100k no problem with a 40k cd? As of now I have no income at all.

 

My main question is what is the best way to borrow the 100k? I have no income and a credit score of 720. Thanks for reading.

  • Re: Starting a dry cleaners
    Moderator_PaulR Expert
    Currently Being Moderated

    Hello Victor,

     

    To decide if this is the best way to borrow the funds you need to start, you need to look at how much business you are likely to get.  If you are in a small town, there may be a chance you won't make enough profit to pay back the loan(s).  I would suggest take your business plan (write one if you haven't) and visiting your local SBA office which you can locate from the SBA's website

     

    Good luck with your future business!

     

    ~Paul

    • Re: Starting a dry cleaners
      Intrakate Novice
      Currently Being Moderated

      I have a business plan already. My break even including salary of 25k for myself is to clean 55 shirts a day. I live in the 10th biggest metro area in the U.S. I don't think finding customers is an issue since I believe I have a marketing strategy highlighted in my business plan that other mom and pops dry cleaners doesn't have. Thanks for the links.

  • Re: Starting a dry cleaners
    chris1985 Apprentice
    Currently Being Moderated

    I'm guessing the SBA route will be the way to go. If you can put 20% down from that check or the cd that should be fine. They might still want you to pledge some collateral, which you might no have but that is something you would ask your friend. I work at a National SBA lender and we also look for some industry experience from the borrower as well. I would start with reviewing your business plan write up as Paul said and then apply for the SBA loan with your friend. If it is a close call on a loan here, but we have some experience with the borrower we can normally push it thru easier, you knowing the lender can't hurt. Good luck.

  • Re: Starting a dry cleaners
    Intrakate Novice
    Currently Being Moderated

    Thanks for the replys. Just met with my banker friend. I don't think the loan is happening by myself. Even if I get approved, the payments would be too high and kill my cash flow. My next step might be to ask my parents to put their house has equity for 100k. The payments may be lowered to drastically, interest of 2.99%. That would help me cross most of the huddles I am facing with this business.

    • Re: Starting a dry cleaners
      chris1985 Apprentice
      Currently Being Moderated

      Or go the investor route and try a site like "Raise Capital" or partner with someone that might want to be a silent partner, but take on some of the risk. I have also seen that some people have turned to "seller carry backs" where you would find an existing dry cleaning business where the owner might be retiring and looking to sell and he would finance part of it, with you paying him the up front money. A lot of people like that type, because they can see the  financials and the seller would have more reasons ($) to help you get started and succeed. Hopefully some of that helps.

      • Re: Starting a dry cleaners
        CorpCons08 Master
        Currently Being Moderated

        I agree with chris1985 on this one. A silent partner may be a good route to go. They can give you the money you need but stay out of the day-to-day operations that you will be managing. The agreement with the silent partner can be designed that once paid back, they drop any ownership in the company and you become sole-owner. Basically it is like a loan in the form of an actual person.

         

        Regards,

         

        Dan

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