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    7 Replies Latest reply on Oct 17, 2011 2:30 PM by jcpisces

    Help with financing

    Joanne Newbie

      I purchased a medium size bar and grill that has an already established clientele and is rapidly growing, but I'm in need of financing.   Unfortunately, I was not prepared for all of the problems that occurred the first two months of opening....i.e.; new air conditioner install; new walk in; health department upgrades.  This took a major toll on my budget.  I'm unable to get traditional financing from a bank, because of personal reasons, but the businessm is owned by a Corporation that I am the President of.  Any suggestions as to where I can get assistance that is not a "pay day type place"?  Thanks for your assistance!

        • Re: Help with financing
          BizOptimizer Adventurer

          I don't know your situation, but there are "less" traditional lenders - like prosper.com that have a "compassion" component.  But, for whoever you approach, you should have a plan - not a sob story.  They don't want to hear about your "problems that occured", as there will probably be MORE problems month 4, 5, and 6.  What they will want to hear - and any other investor you approach will want to hear:

          • WHAT is the new plan?  How are we going to get ready for the month 4, 5, and 6 problems - as SURELY you aren't planning on continuing as originally planned?

           

          Even if they aren't asking, you should be.  A business can suck money out faster than it puts it in.  You need a plan.

           

          Good luck

          • Re: Help with financing
            phanio Pioneer

            I assume that your credit is bad - given what you stated in your post.  Thus, most options like peer-to-peer loans are probably out for you as well.

             

            If your bar accepts credit cards as payments from customers - then you might qualify for a business cash advance (we have information about these on our site as well as a way to search for companies that provide them - you search, you compare and you select all at no cost).  Business cash advances are based on future credit card sales and are paid back from those future sales (usually about 5% of those sales - leaving your business with the remaining 95% to continue operations).

             

            Best of luck.

              • Re: Help with financing
                BizOptimizer Adventurer

                Be very careful with this - 5% doesn't sound like much, but if it is amortized over a week, or a day - it can get HUGE.  Factoring can get you some cash, but they generally want to lock you into longer term deals than you need - at higher rates if you calculate them out.  BE CAREFUL!

                  • Re: Help with financing
                    phanio Pioneer

                    The 5% is 5% of your future sales until the advance is paid back - it is not amortized.

                    Business or merchant cash advances are expensive as is most non-bank financing.  But, many businesses just have no other options.  Alternative financing should only be for short term needs and only used short-term.

                    The gaol is this.  If you have no other option but a great opporunity in front of you (one that brings in more than it costs) then by all means use these types of financing.  Then, in time when your business grows stronger and you can qualify for bank financing or when you don't need financing - then quit using these types of loans.

                    Capital is just another tool (asset) to be used to grow your business.  Just like any other tool if it costs more than it is is worth or what it brings in then you should avoid it.  But, if you are only looking at the cost and not the total return - then you are bound to miss many opporunities - opportunities that can take your business to that next level.

                • Re: Help with financing
                   pizzaman66 Newbie

                  Hi Joanne,

                   

                  I have been in exactly your situation, and while I am still looking for financing that works for me, I will tell you that I have checked out a number of these "credit card advance" companies. My finding is that they are good for a short term solution to a financing need, but probably not the way to go for your long term financing needs. As BizOptimizer pointed out, be very careful if you decide to go that route and be very sure you understand the terms and conditions of the offer.

                  • Re: Help with financing
                    fastfunding Newbie

                    Alternative financing is the likely way to go under these current lending conditions.  I spent over 10 years in traditional financing and decided to join the alternative arena because that was the only way my A credit borrowers were able to qualify for funding.  This type of money is certainly not cheap but is often the only viable way to obtain business financing nowadays.

                    • Re: Help with financing
                      jcpisces Newbie

                      I was using one of the cash advance company in the past, the rate was 10% per date out of my credit card sale. If you dont have a lot of credit card sale for your company, i will recommend it. In the other case, if you have hugh amount of credit card sale, i will try to avoid that because in a long term, you will short on cash flow again.