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    4 Replies Latest reply on Oct 23, 2009 3:39 PM by VinoGallery

    Getting ready to get a line of credit

    VinoGallery Newbie
      I am in the process of opening a Retail wine shop and art Gallery in Saint Louis. I have a very good business plan setup and ready to go. I have already raised $75000 in startup capital mostly for construction and opperating expenses now I would like to try to get a line of credit for about $50,000, I was hoping for some advice on approaching a bank about it. My Girlfriend and I are only 23 but we are both very capable. We are both level 2 samalie's I have a degree in both finance and accounting. I have been starting and running my own business's since I was 12 so I have a fair amount of capitol if it becomes required. the line of credit is mostly to have additional capitol avalible to take advantage of close out oppertunities on wine that would obviously take more than the standard 30 day terms to pay off.

      So if anyone can offer some advice or experiences I would greatly appriciate it.

      I hope I am in a good situation because the line would be used to purchase wine which is very liquied in the event of failure they would have a lot of hard assets for a worst case scenario.

      Thank You for any help

      Alex
        • Re: Getting ready to get a line of credit
          phanio Pioneer
          First things first - banks don't want you collateral - they want you to repay the loan. For a line of credit - your best bet is to find a local bank or credit union and apply for a personal line of credit. As a start up, not may banks will fund a line of credit unless you have financial assets to back them - financial assets like accounts receivables, purchase orders, or credit card receipts. I did this when i started my first business. I took one day and went and applied to 8 different banks and credit unions for a personal line of credit. Of those 8 - 3 declined me - 4 gave me $5K line of credit each and 1 (the credit union) gave me $15K line of credit. All of this combined gave me the funds to start and grow that business.

          Other way - harder way - would be to place $50K of some amount into an interest berring savings account or CD - then use that account as collateral for a line of credit. This is 100$ secured for the bank - plus the interest earned on the CD or savings can help offset the fees and interest on the LOC.

          When you get your business going and start to generate financial assets - then go back to the bank and try with those assets.

          I would start with local or regional banks who may really want your business (national banks will probably laugh you out the door) or credit unions who support your community and will be more willing to help.

          Business Money Today
          www.BusinessMoneyToday.com
          • Re: Getting ready to get a line of credit
            VinoGallery Newbie
            Thank you for your response. I have been talking to a local banker that works with another company I consult for and we are working things out I think. The bank is pretty much ready to go forward I put 50k in equity into the company and they are willing to write a line of about 50k with weekly meetings and audits to make sure that I am using the line for inventory and not opperating expenses so I think things are going to go very well.

            Alex