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    19 Replies Latest reply on May 3, 2008 11:35 AM by victoria

    SBA loan for existing Biz

    Motivated123 Newbie

      Good Morning!

      I've woke up one morning and told my wife that I want a business for her and my son. I told her that if anything happens to me, she will have the business to financially support her. Of course, she called me foolish and asked to go back to sleep. Since then, I 've found couple of potential businesses. However, there was one that stood out. It was the video store. The criteria for buying existing business was: 1. It had to be easy to run 2. Makes money 3. Rent was reasonable and easliy transferable with little or no increase 4. Business establishment > 5yrs 5. No Competition within certain range. The video store would be perfect for my wife to run. She was motivated as well when she understood that there would be more shopping money for her.

      Long story short... I've worked a 9-5 job and have no retail experience. I've found an existing business I like. The next step is finding the financing. The store is listed for 120k. I need to borrow 50K + closing cost. What kind of loan will help get this biz and where can I find them? Last time I checked, I have close to 760 credit score. I do not have a house to borrow against. So, line of equity is out of the question. I've heard about SBA loans. Will SBA loans finance existing business purchase? Is it better to get SBA loans through banks or city? How long does it take to get pre-qual for SBA loan?

      Your response is very much appreciated. Thanks.
        • Re: SBA loan for existing Biz
          LUCKIEST Guide
          Motivated, It is the American Dream to own your own business.
          First suggestion. Visit SCORE in person or online. They help people who are going into business FREE.
          http://www.score.org/ They also know the local SBA and local bankers.
          They will help you develop a Business and Marketing Plan, along with cash flow.
          Best of luck, LUCKIEST
            • Re: SBA loan for existing Biz
              CorpCons08 Ranger
              I'm curious about something LUCKIEST. On the SCORE website it says the initial consultation is FREE. Does that mean everything afterwards has a fee? Just curious because I have sent some people your way as well.
                • Re: SBA loan for existing Biz
                  LUCKIEST Guide
                  As far as I know, everything at SCORE is FREE. The initial consultation in person with SCORE Counselors,
                  and as many follow up consultations as needed are all FREE. This goes for online counseling also.
                  SCORE also has a FREE online Seminar with 26 FREE courses at "www.score.org".
                  (I think that I have used the word FREE to many times.)
                  However some SCORE chapters do have workshops and charge for them. (like Quickbooks training)
                  LUCKIEST
              • Re: SBA loan for existing Biz
                Ed O'Gee Adventurer
                Hey Motivated that is great. Welcome to the board and good luck with the business.

                Seems like you have a solid credit history. My question is before you go to the SBA, have you check with your bank? Whether you work with bofa or another bank most of the big boys have programs for small business owners. Also given the tough credit market, you'd be a welcomed risk with that solid credit score.

                I know that Wamu and Bank of America have business line of credit products that look at both your personal and business credit scores, so for you it would be a matter of proving the business your are buying is profitable, which is what it sounds like plus, verifying your credit scores and assets.

                Talk to whoever you bank with now, trust me they should be eager to help and if not, you need a new bank.
                • Re: SBA loan for existing Biz
                  Triumh_IG Newbie
                  Good Morning Mr. Motivation!

                  Some of my greatest ideas have been created while I slept or layed in bed late at night. Therefore I am sure you have a good thing in mind. My name is Nancy and I own Triumph Investment Group. I have several products including SBA loans, which I believe might fit your needs. I work directly with dozens of lenders and have found that SBA has excellent rates, terms, etc. I'd be more than happy to analyze your entire situation at no cost and perhaps help you achieve your dream! Feel free to contact me directly at TRIUMPH_IG@sbcglobal.net, I will be more than happy to help you.
                  • Re: SBA loan for existing Biz
                    bob1200 Newbie
                    Hi Motivated,

                    I'm a real estate sales person and I've had some experience with business buyers looking for money/capital to purchase a business.
                    The SBA is a credible place to go for information and counseling. To my knowledge, they're not a bank and don't make loans.
                    If you go to a commercial bank first, they'll ask you a number of questions to qualify you further; all of them will ask you for a business plan, and income/loss projection.
                    The SBA will tell you all of this, will describe to you the process and give you guidance to establish your "business existance" first - so it's lawful, legit, and recongnized: this means the DOL and Secretary of State with all registrations and filings. This is necessary for any commercial bank loan. So now you need necessary filings, and the business plan/income-expense stuff. This looks something like: Business Buyer, LLC to purchase Video Store, Inc (you're Business Buyer, LLC)
                    If you're a go-it-alone non-structured investor individual, then the bank translates this into a more risk which equals more "cash injection" or downpayment. You'll still need the plan and income/expense stuff, but they'll focus on your personal economic history obviously. This means they'll want to see a "track" record of experience in prior operations/endeavors. This is the Catch-22 which turns into a search for cash: property equity, gifts from friends, family, etc. In this scene unless the lottery comes through, or you launch a sucessful investor-looking-for-capital search - cash from friends, family is your way. Credit scores, good or bad establish interest rates (good risk, less expensive, not-so-good risk, more expensive). I've done this before, plus or minus you'll definately see these things.
                    On a more positive note, investor capital is available. Community forums like this are quickly becoming a great way for people to hook up in business. I think these communities are a great thing. Also the SBA is composed of business leaders, former business leaders, entreprenuers and as such have their own communities. Tap into them, you'll thank yourself. I need to get on the stick too, by the way! Good luck.
                      • Re: SBA loan for existing Biz
                        CorpCons08 Ranger
                        You are correct bob1200. The SBA does not make loans directly. Instead, applications for loans are taken at a bank and qualified for SBA if they do not meet the qualifications for a conventional loan at that bank. Small Business Consultants, including my consulting firm, also qualify individuals/businesses for SBA loans directly.
                      • Re: SBA loan for existing Biz
                        bob1200 Newbie
                        oops. Correction here. When talking about the SBA, I mixed up my experience with SCORE in Seattle with it's relationship to the SBA which is an informal one. SCORE is made up the business people, they'll help to shape your intentions into something more attractive to commercial lenders. The SBA does has programs that you participate in. Upon qualification, they'll put you into a particular program that will bring supplemental financing to help your cash/downpayment in addition to institutional financing. Sorry for my earlier blurry gloss.

                        One BIG thing to remember, the more financing the more payment, the more you'll need to make the business profitable quick to make the payments. You don't want to default on financing.
                        • Re: SBA loan for existing Biz
                          Unsecured Newbie
                          I think the best option for you is unsecured lines of credit/ loans. Please contact me: joevasallo@yahoo.com

                          for more info. Thanks.
                          • Re: SBA loan for existing Biz
                            BDS INC Adventurer
                            I'd talk with whoever you bank with as Ed suggested. If you have a solid credit and banking history with them, they will likely help you out.
                            • Re: SBA loan for existing Biz
                              WEBillions Adventurer
                              It's likely that you don't quality for an SBA loan yet. Your business will need to be stable and profitable to qualify for an
                              SBA loan. You'll also have to put up basically everything you own as
                              collateral. If that doesn't pan out for you, you can also consider an
                              asset-based lender. The interest rate will be a little higher because
                              they are more likely to loan to what they consider higher risk
                              customers.

                              If you still want to consider whether starting a business is a good idea, please check out my blog at mickysbusiness.blogspot.com

                              It goes over some of the things you should really consider when thinking of starting a business.
                              • Re: SBA loan for existing Biz
                                loan guy Wayfarer
                                Motivated123,

                                With that credit score I can help you get a line of credit line to meet your need. Sba is a long progress and can be a hassle. Lets talk. Email me at cory@walkerlender.com.