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    2 Replies Latest reply on Sep 20, 2010 5:22 AM by BiznessLender

    Has anyone worked with P.P.E.P. ?

    azbeergirl Newbie
      Hello! I need help making a financial decision. I started my business 1 year ago this month.
      It has grown so fast it amazes me. Very exciting. I started off working from home. Now I share a showroom
      with a florist. My delima is, 85% of my profits go to vendors. So, I'm making next to nothing. If I get a loan and purchase
      all of my own equiptment cutting my vendors out, I would be doing so well I could actually open a location. I already have 43 confirmed future orders about ($40,000.00).
      We have $35,0000 in an IRA and 78,000 in home equity. I just found out today we were declined on a home equity line of credit because they need 2 solid years of income coming from the same source. My husbands un-employed.
      It's a 100% woman owned company. I heard there are loans out there for minorities. I have been approved for a SBA loan thru P.P.E.P. a community organization that is government funded and excepts donations. The only problem is the interest rate is out of control at 10% (with good credit). Are there any other options out there for a company only one year old? My thinking is (if I go the ppep route) that I'd rather pay off a loan at 10% than not own and pay out 85%. My husband say's it's a stupid business decision. What do you think?
        • Re: Has anyone worked with P.P.E.P. ?
          LUCKIEST Guide
          P.P.E.P. ??, Welcome Lisa

          No I have not worked with P.P.E.P.

          Suggestion: Contact SCORE online. SCORE is FREE and you can chose a SCORE Counselor (or more than one) with a financial or legal background that should know about P.P.E.P.

          The last thing think I would do is get between you and your husband.

          Good luck, LUCKIEST
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          • Re: Has anyone worked with P.P.E.P. ?
            BiznessLender Wayfarer
            For what its worth, I do not find 10% to be an out of control interest rate for a business that is:

            Not well established
            In the food service industry, very high risk

            Having said that, you might still have a few options. You did not provide enough information for me to give you better advice (like the amount you are trying to borrow for example), but one thing you might look at is seeing if you can convert your IRA into a Self Directed IRA. I know there are IRS guidelines on them, and how you invest the money from an SDIRA might prevent you from loaning to your own business, but there might be ways you can use it to help your situation.

            You might also be able to do equipment leases, which will give you the equipment you need (provided the equipment qualifies). Leases can often be easier to qualify for than loans, and with some lease companies there is some flexibility in the time in business.

            The bottom line is this. Determine on an annual basis how much you will save by investing in your business. Then determine how much interest (tax deductible I will guess) you will pay at the end of that same year. If you end up with a number that is a plus before any thought of tax deductions, I cannot see where there is much more thinking you would need to do about it. But you might also want to find out for the SBA program, do they have the funds available, how long does it take to fund, and what kind of fees are you looking at. You will want to factor all of that in as well.

            You might also have a family member or friend who would be willing to put a stock portfolio up as collateral for a loan. Depending on the stocks, as much as 80% of the value can be borrowed against them, the interest rates are VERY low, in the 4-6% range, and interest only paid quarterly. You can take the loans for 3-7 years, and just pay interest for that period of time. Once the loan is paid back, the stocks are no longer used as collateral. This type of loan can be funded in a couple of weeks or less, depending on the collateral.

            If you have any questions please feel free to contact me or visit our website,

            Best regards,

            Rafael Pabon
            President, Business Lending Associates