Post a new topic
    34 Replies Latest reply on May 14, 2009 2:24 PM by funds2924

    12 years in business, A1 credit but still get turned down expansion funds

    kmdguy Newbie
      Hi there,

      I've run a small animation studio on my own for the last 12 years. We create animation and images for attorneys and architects. We're a small studio consisting of just my wife and I but we've done pretty well without ever having to finance anything from the start.

      I'm interested in expanding my company this year by upgrading all of our computers to be extreme powerhouses, add more computers and expand our services into render farming (it's an animation thing). I need to do this in order to compete and produce our work quicker on tighter deadlines. Without it, we're sort of stuck at a glass ceiling that notches lower and lower.

      Our annual sales have run between $80,000-$110,000. Both my wife and I have credit scores over 800. I've gone to 3 big, well-recognized banks that are SBA preferred lenders asking for a total of $50,000 for computers/software. We get turned down every time because they all say that no matter how good your credit is, how long I've been in business, they only loan businesses up to about 20% of their annual sales, maximum. Each time, they offer a line of credit for about $20,000 but I can't find any source that will provide a lending solution for what we need, despite the fact that we've been around for 12 years, have been profitable every year and have excellent credit.

      I've never had trouble getting credit with the best rates at all in my life and so I'm a little deflated as to why this is. If I've been around for 12 years with excellent credit, a business plan and profitability and can't get $50K for computers, then how on earth to people get $100K or higher for new start ups that don't show ANY income yet?

      I've talked with my SCORE counselor after the fact and asked him, "hey I thought this was the SBA loan programs were for, guys like me", and $50K seems like a small sum for an average business loan. He said to me, "ya banks work that way, it's tough."

      So, has anyone out there in a similar situation experienced this and how did you overcome it? Or didn't you?

      Best of luck all,
      Dan
        • Re: 12 years in business, A1 credit but still get turned down expansion funds
          LUCKIEST Guide
          kmd, Welcome to this great site. You are going to get many good answers and also offers of credit.
          Glad you talked with your SCORE counselor after the fact. The economy is going through changing times.
          Hope SCORE told you about Business and Marketing Plans. Lenders or investors will want to see them.
          Do you have an Accountant??
          LUCKIEST
          • Re: 12 years in business, A1 credit but still get turned down expansion funds
            karaokekrazy Newbie
            What financial instututions have you talked to? Bank Of America has been the number SBA lender for the longest time. You might want to check on some other types of loan aside from SBA. Give them a call at 8886004000.
              • Re: 12 years in business, A1 credit but still get turned down expansion funds
                kmdguy Newbie
                Hi there,

                I've checked with Washington Mutual (with whom my company has banked for years), they would only float me up to 16% of my gross annual revenue. I checked with Wells Fargo with whom I've done many no-doc mortgage packages for investment real estate over the years, despite that they've said they'll only do up to 20% of gross and then U.S. Bank with whom I have no previous banking relationship. Again, they're all happy to give me a $15K-$20K line of credit, but what I need is about $40K for computers/peripherals and $10K for some miscellaneous operating expenses.

                When I first went into Wells they looked up my credit info, business info and within 15 minutes said, ya this shouldn't be a problem. After 4 days later they finally broke down and admitted there was nothing they could do for me in this instance except a small LOC. I thought to myself, $50K isn't a big amount of money really compared to what average business loan packages are so I figured this would be as easy as buying a new car.

                I suppose I could check with BofA, but the message I'm getting is that despite credit and time in force, banks simply don't do business loans for more than X percent of annual gross. If BofA is any different then I'd like to know before I spend 4 days haggling through the process only to get turned down again. Anyone from BofA here with solid knowledge of this?

                Thanks all!
                Dan
              • Re: 12 years in business, A1 credit but still get turned down expansion funds
                CEO Space Scout
                Yes, I experienced this years ago in my beginning business stages. And as I've gone on and had other businesses myself and consulted businesses with a similar problem I've found that it is much easier to raise large sums of money that it is to raise small sums.

                There are many reasons for that, and I won't go into it because it doesn't solve your problem.

                Our network (CEO Space) has funded over $8 billion in just 2007 so check into it plus it has other benefits for you as a business owner.

                Of course, knowing what I know and having seen what our network has done, it is my main recommendation, but since I understand that it isn't for everyone I would also suggest some of the other funding sources in this forum Triumph and conscorp.

                Also check into www.prosper.com

                If you have any accounts receivables that you could factor, that is a possibility too.

                Good luck.
                • Re: 12 years in business, A1 credit but still get turned down expansion funds
                  eddie518 Newbie

                  im going thru the exact same thing 771 fico and every one says " oh just go SBA" well ive been to 9 big banks i walk in with everything: business plan, projections, resume, etc.. Five days later here comes the denial pitch. I then say what is SBA???????????????? We have internal policies that that wont allow us to proceed.Well I found a solution that has helped me email me at eddieashelton@gmail.com. I will lead you where you can get the money. It seems to me everyone gives advice but no one tells where to get the money. I will tell you. You dont want to keep applying for credit because then you give the banks a easy reason for denial " too many recent inquiies"
                  • Re: 12 years in business, A1 credit but still get turned down expansion funds
                    DomainDiva Ranger
                    This may not solve all of nyour problems but got to Best Buy. They have a BBY for Business and the larger stores will have a BBYFB consultant on site.

                    You can open a credit account 2 years at no interest. They have tons of special order stuff thats not stocked in their stores (for obvious reasons). You will probably be able to get about half maybe more of the equipment you are looking for. Its what I did when I had to buy stuff for my team. I had no choices at all and this solved my problem.

                    ALSO...call Citibank, they are doing 12 months no interst on new business accounts. That would probably cover the remaining costs.

                    These days banks and credit are slow...small business people have to create their own financing!
                    • Re: 12 years in business, A1 credit but still get turned down expansion funds
                      LUCKIEST Guide
                      I am a SCORE Counsel and we are see this a lot. The banks are clamping down. It all has to do with Real Estate
                      and losses the banks are taking.
                      I am not a banker, BUT banks are in business to make money. They do not want your fixed assets, your
                      inventory, or your real estate. We all know, they want to get paid back.
                      So they are making it tougher.
                      SCORE is FREE, can help with Business Plans and in many cases talk to the right person at local banks
                      LUCKIEST
                      • Re: 12 years in business, A1 credit but still get turned down expansion funds
                        BOAcustomer Newbie
                        Dan,

                        I wasn't clear on whether this investment in hardware will improve your sales/income or just keep it from falling. A good investment should give you "significant" return (fill in your own target number) by allowing you to pull in more customers, hire more people, or do more work in less time.

                        If you're just trying to stay competitive and this won't increase sales, then the $50K is lopping off 45%-63% of one year's income. Even with zero interest and spreading the payments over 5 years (a very long time for computer hardware) you're paying out 9%-13% of your income. It doesn't sound like a wise move for you, much less for the bank.

                        That's enough numbers. Banks are in the business of making money and managing risk. In this case, they're looking for assurances that you can pay the money back out of regular cash flow because they don't want the hardware and they don't want your house. If you don't have a plan that shows how they get their money back (and you get even more), then you need to create one or come up with a different plan.

                        Don't underestimate the value of tapping your home equity loan or any other lines of credit at your disposal. Do the math and decide whether it's a good return for you. Honestly, if you don't believe you're a good credit risk why would anyone else? Other good sources of funds, especially for entrepreneurs, are family, friends, and customers. Offer them investment opportunities.

                        Good luck.
                          • Re: 12 years in business, A1 credit but still get turned down expansion funds
                            kmdguy Newbie
                            <<I wasn't clear on whether this investment in hardware will improve your sales/income or just keep it from falling. A good investment should give you "significant" return (fill in your own target number) by allowing you to pull in more customers, hire more people, or do more work in less time. >>

                            Hi there, thanks for your reply. Ya, the investment in computer hardware would actually increase our bottom line by at least $4,000/month to considerably higher by allowing us to work with more clients, perform quicker and lease out the CPU power when it happens to be idle. Depending on the legal projects we could score, our bottom line could increase by as much as $10K/month. We can continue to "maintain" where we are without it, but we just can't grow anymore really without an investment in sheer horsepower at our disposal and the software to drive that horsepower.
                          • Re: 12 years in business, A1 credit but still get turned down expansion funds
                            moogrdotcom Wayfarer

                            What is your business legal structure? Are you sole proprietor?

                            If your sole proprietor then apply for credit cards on your own merit and expand the business in stages. Get the new PCs and part of the software you need and then expand as you sell out those services.

                            If you're an LLC/Corporation then work on building corporate credit. Start small with Staples/Office Depot and some net 30's and then build up to business cards such as Citi Platinum Plus, Chase and American Express and work from there.

                            Banking 50k is expensive for computers, Dell usually hands out leases and loans (backed by Citi) on PC equipment like Candy. Have you considered leasing the hardware, writing it off and purchasing or even leasing the software and figuring the lease into your pricing as cost of doing business? PC/Technology equipment plumets in value - much faster than you could pay 50k loan.
                            • Re: 12 years in business, A1 credit but still get turned down expansion funds
                              moogrdotcom Wayfarer

                              What is your business legal structure? Are you sole proprietor?

                              If your sole proprietor then apply for credit cards on your own merit and expand the business in stages. Get the new PCs and part of the software you need and then expand as you sell out those services.

                              If you're an LLC/Corporation then work on building corporate credit. Start small with S t a p l e s/O f f i c e Depot and some net 30's and then build up to business cards such as C i t i P l a t i n u m Plus, C h a s e and A m e r i c a n E x p r e s s and work from there.

                              Banking 50k is expensive for computers, D e l l usually hands out leases and loans (backed by C i t i) on PC equipment like Candy. Have you considered leasing the hardware, writing it off and purchasing or even leasing the software and figuring the lease into your pricing as cost of doing business? PC/Technology equipment plumets in value - much faster than you could pay 50k loan.
                                • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                  kmdguy Newbie

                                  Hi there,

                                  I'm an S-Corp for 15 years and have quite a bit of business credit established. I have a gold AMEX (member since 1995) and an account with Dell which has an open balance but the ceiling is only $10K. I'd need close to $25K with what I need from them. I'll talk to my IT rep there and see about bumping that up and leasing the gear from them.

                                  Over the years I've used my credit carefully, which is why I probably have an 800+ FICO. One thing I'm trying to avoid is to get $10K of credit here, $10K there, another $10K over there and pretty soon have all these expensive LOCs all over the place. My hope was to be able to obtain an easy to manage, lump sum loan by which I can then manage all my purchases (hardware, software and misc.) from one payment source. It seems to me that it would be cheaper that way than getting many expensive lines of credit set up all over the place. Does that make sense?

                                  Thanks,
                                  Dan
                                • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                  mlebovits Newbie
                                  Have you looked into leasing the equipment.

                                  There are one page, application only programs that can easily finance the dollar amount you seek. Approval can be obtained in approximately 24 hours. If your credit scores are as high as you claim, it sounds doable.

                                  Would be happy to assist.

                                  Marshall Lebovits
                                  www.Funding911.com
                                  310-371-4011
                                    • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                      moogrdotcom Wayfarer

                                      Apologize for my double post above. With scores/credit like yours i would look less at bank financing and more at credit/leasing options. You should have no Problem getting lease from Dell on items or even HP (i prefer HP myself). At least with leasing your paying for utilization of a depreciating asset more than ownership and that may better support your cash flow
                                      • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                        Risktk666 Newbie

                                        I was actually in the same situation about 2 years ago then came across a very good website that provided me with everything I needed. Now understand that we are in a totally different economy and you might not be as successful. But at the time of my loan my FICO score was 738 which is an A in their standards. I got funded in 7 days for 38k @ 8.98% over 3 years. Now I understand that is pretty high but you get what you can how you can. I'm happy to say that I paid off my loan in under 2 years and it allowed me to open my 2nd store at an essential time. Check it out!

                                        www.Prosper.com

                                        btw, they have been on various t.v shows and in magazines with extremely great credentials.

                                        Best of Luck!
                                      • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                        MDF2008 Wayfarer
                                        Hello Dan,

                                        I hear your pain. I have been there done that....

                                        The simple solution is you need to market your business and business financial needs to several banks.

                                        On the flip side banks do need businesses like yourself; so target the top 100 banks and I bet you will find one or two who will step-up to the plate for your business needs.

                                        It sounds like you have the right risk formula for a bank but the meltdown in the banking mortgage industry and bank loans industry are tightening the risk factors even more; even when you have perfect scores, sales, etc.......Banks do not want any risks!

                                        Depending on your business model there are other options too.

                                        All the Best--MDF2008
                                        • Re: 12 years in business, A1 credit but still get turned down expansion funds.
                                          techtromike Newbie
                                          I can help, I own a tech company in Maryland and we provide IT total finance solutions for small businesses. It can cover hardware software, and any assoicated services, such as professional installation, support plans, and even training. We even have promotions that include no payments for 12 months. Our rates are competitive and you own everything. Give me a call 1.877.832.4300 or (301) 362-7350. We can get you going in about 24 hours.

                                          We recently had a non-profit that needed new computers and didn't have any cash to get them. They went through our program and recieved 9 new Dell computers w/ 20' flat screens, win xp, with office 2007, photoshop,etc. This allowed them accomplish more all with no money of their pocket and a couple hundred a month once their payments picked up after the promotion period. The computers they had before ran out of hard dist space and they could not even save to them any more.
                                          • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                            MoneyforBiz Wayfarer

                                            Well for starters, all lending is based on 3 factors......credit,capacity to pay and collateral........you need alternative financing due to your business has 2/3....I am a alternative financing source who specializes in providing capital for businesses who were turned down by traditional banks....call me @ 866-283-5198 to discuss and I will forward you a application after we talk....

                                            Regards,
                                            Jason
                                            • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                              walterdon Newbie
                                              lets sort out with a loan,do provide me with the necessary informations needed by an investor.send that to walterdonn@gmail.com
                                              • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                                roscocpa Newbie
                                                I just found out a nice little tidbit today that may be helpful for your or for others trying to navigate the SBA secret society..... OK, so it shouldn't be a secret, but, I recently helped a client obtain the coveted SBA 504 loan program. Yep, we actually closed on the deal, so I am speaking from real experience. We closed the deal on December 31, 2007 so this is pretty real time information. After getting several inquiries from individuals like yourself trying to find an SBA lender in their state (my deal was in California), I contacted my SBA Lender in San Francisco today and here is what I found out. In order to be an SBA lender, you must be a "Certified Development Company" (CDC). Just because your name is Bank of America, or Wells Fargo does not a CDC make you.... in fact, I was told that these companies also use a CDC when making an SBA loan. That's right, they use an outside agency that is certified in the process, even though they may have local "in-house" experts that do the majority of the loan processing and the client interface (i.e., you'll probably never talk directly to the CDC responsible for underwriting the loan). The banks, like Wells Fargo, B of A, etc. of course get a referral fee from these CDC's but they'll never tell you that, or if they do, it'll be so fast and the disclosure buried in so much paperwork, you won't realize that this was the case.

                                                Anyway, I have a great website for anyone interested in an SBA loan who wants to go straight to the CDC and skip the middleman bank. You won't have to navigate the SBA Loan process through an interpreter who may or may not be able to properly translate the sometimes tricky program guidelines. You will be talking to THE actual lender who will be underwriting your loan directly with the SBA. Personal experience has shown that the more people you have involved in any loan transaction, the longer it takes, and the more confusing the process is not to mention the odds that it gets canned in the process increase exponentially.

                                                OK, now for the website www.nadco.org/nadco/welcome.html then just click on the CDC directory icon and select the state that your project is in and a list of CDC lenders will come up w/ contact info. I have no idea why at 40 years old, and a seasoned CPA I never knew this until today. It is amazing the SBA doesn't let you know any of this on their own website, or that it is buried to where it is un-intuitive as to how to find it. My rant with having "government" sponsored programs like SBA and FHA is when people just glumly pop-off that these are the simple solutions, when in fact, unless you are fortunate enough to get connected with someone who is actually halfway intelligent in the business lending community, you will be SOL when it comes to getting into one of these programs that you, the taxpayer, actually make possible. Sorry for the rant, its just upsetting that us working class self-employed are actually in the highest tax bracket most of the time and are largely responsible for these FHA and SBA programs being in existence (i.e, our tax $$ fund them!), and yet we must be further humiliated by the process of trying to extract these monies (our monies) back out of the government SBA & FHA programs on the back-end to try to support and grow these very same businesses, our businesses.

                                                Hope this helps! Good luck!
                                                • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                                  FinanceHelp4U Wayfarer
                                                  *Hi! I am a Financial Consultant and should be able to help you without any problems. I have years of experience working for the U.S. Small Business Administration (SBA Loans), approving/denying loans for the whole Eastern half of the United States. Additionally, other experience I have in commercial lending via other routes and even residential lending experience. SBA Loans are not for everyone - and when I do see a "fit", I know where the file needs to end up at to get approved. I have alot of SBA contacts, too numerous to even mention, but the majority of loans I assist in getting approved with my programs, services and consultating are not even submitted to SBA - they are a "fit" for other programs we offer and my job is not done unless I obtain the best results for my clients. Knowledge is power - believe me, no truer statement has ever been made. I love what I do and am passionate about ensuring my clients obtain the financial tools they need to suceed and thrive in their chosen field. You have to know how to submit your loan paperwork correctly also - so sometimes it is worth the extra cost of obtaining a knowledgeable Consultant instead of spinning your wheels, wasting time and staying frustrated. Get over it - "your time is money".... I can help you - if you are interested, please let me know, I would be glad to try and assist you....If you are interested in my assistance - please e-mail me at hardwork70@newwavecomm.net +with your contact telephone #, name, a little more specific info and I will be happy to give you a call....Look forward to hearing from you,+</stro<br />Carol
                                                  • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                                    FinanceHelp4U Wayfarer
                                                    *+Hi, I am Carol, a Financial Consultant. I think I can help you with your needs. I have numerous years working for the U.S. Small Business Administration and in commercial lending. SBA Loans are not
                                                    *Please feel free to contact me, I will be glad to help: My e-mail is hardwork70@newwavecomm.net, (606) 598-4218 telephone, (606) 813-5673 Mobile*

                                                    I will be in and out all weekend, if you try to call and do not get an answer, leave me a message and I will call you back as soon as possible,

                                                    Thank you,

                                                    Carol
                                                    • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                                      Mark SLF Wayfarer

                                                      Have you looked at leasing the computers and software. I would be more than happy to help you with this. With your credit ratings and length of time in business you should not have any issues. My number is 248-714-5382 or you get check out our website at http://www.spotlightfinancial.biz or send me an email at marklomas@spotlightfinancial.biz.
                                                        • Update on my quest
                                                          kmdguy Newbie
                                                          Hello everyone, thanks for all your great responses.

                                                          After sitting back and evaluating my options, I decided that a lump business loan was really not the best way to go.

                                                          I ended up easily getting a $30K lease for all the equipment I needed without any trouble at all. I also got a $45K LOC from Wells Fargo quite easily as well to fill in the gaps of operating expenses and such. If I would have gone this route initially it would have saved me a lot of headache and time, but once I started down this path it was quite easy with my credit score and such to get all I needed.

                                                          I now have all the equipment installed (it took a month of some remodeling and waiting on the hardware to be built). Next week I can put it into full use and start ramping up my advertising efforts to let everyone know about our new capabilities.

                                                          I'd be happy to hear any other suggestions from experienced business folks about how to carry on from here.

                                                          Thanks again,
                                                          Dan Underhill
                                                          Keyframe Multimedia, Inc.
                                                          www.keyframe-multimedia.com

                                                          RenderFriend Render Farm
                                                          www.renderfriend.com
                                                        • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                                          TJMorehead Adventurer

                                                          Hello,

                                                          I think I may be able to help you. Send me an email if you are still in need of financing. Email: moreheadsconnections@gmail.com

                                                          Warm regards,
                                                          TJ Morehead
                                                          www.moreheadsconnections.blogspot.com
                                                          • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                                            money4u Wayfarer

                                                            Have no fear. There is a solution. There is a way to get the money you need to expand your company. Please email me at dawnbergeron@hotmail.com to discuss this further.
                                                            • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                                              fundme Wayfarer
                                                              Dan,

                                                              I would love to be able to get a proposal together for you

                                                              Brian Faulkner
                                                              469-402-1125
                                                              www.motherfund.com
                                                              bfaulkner@motherfund.com
                                                              • Re: 12 years in business, A1 credit but still get turned down expansion funds
                                                                money4u Wayfarer
                                                                Hi Dan,

                                                                I have some information for you that you could use to help you get the funding you need. Have no fear. For more information email me at dawnbergeron@hotmail.com.

                                                                Thanks,

                                                                Dawn