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    12 Replies Latest reply on Jul 22, 2012 1:07 PM by Moderator Berta

    Finding Funding for my new business

    JoshL_1 Newbie

      I recently obtained my business name and am starting to gather numbers and ideas and starting to mesh them together.


      I would like to know how I can obtain a loan to open and start my business.


      I'd like to open a small media cafe where people can hang out, study buy media ect.


      To put the ideas together, something like Starbucks, crossed with a small music and movie store.


      I'm in the process of designing a business plan or at least a well structured group of ideas. The funding I need will go to buy equipment for the small cafè, to find a location and maybe pay a month or two of rent. Maybe pay someone a little to help out.  And just to have a little extra cash in case something comes up.


      I'm not sure what I need or what to do to start the loan process. Do you have to ave good credit to get a loan? I don't think I would need any more than $4500-$5000. That may even be a little bit high.


      As far as me, I would very much like to get the ball rolling fairly quickly, but I understand that I may have to wait and be patient. I don't have any personal savings and I know that banks want to know how your going to pay the loan back, and that it can't be solely based on business profits, but that's really the kind of information I'm lookin for. How long do you have to payit back? Can I just make monthly payments on it until its payed off ? Can I get a few months before I start paying?


      Any help would be appreciated.


      Thank you for your time.

        • Re: Finding Funding for my new business
          maestro274 Adventurer

          Besides the business plan, you'll need an executive summary. Most funders only want to see a 1-2 page executive summary, they don't have time to read the entire business plan, but you will still need the business plan. You want to be able to forecast your casflow in and out. You need to amplify your experience and ability to run the business. Once you have everrything, You would submit your executive summary and your statistics to a lender and they will either proceed or ask for more specific information, I'm a commercial lender, so I would be able to help you when you're ready. I also want to stress that you make sure that you set up the business properly. Meaning incorporate, preferably out of Nevada. If you find the right people to do the corporation, they will also help you set up business credi and assist you in getting a loan, they will also set up a line of credit for you, minimum credit score required 650. I also suggerst Nevada, because they have the stronest laws to keep your personal and business assets and liabilities separate.

          • Re: Finding Funding for my new business
            Erik Salmon Scout

            Besides the business plan, the bottom line to funding any business is you first have to create a funding plan. This plan will consist of several sources not just one. You will have to have good credit. You will need to fund your own business with your own funds because if you do not, what would make you think anyone will.


            Before you even start your business you will want to make sure you have enough funding to carry the company through to profitability. You can get free cash flow projection templates from I suggest doing a 12 month projection and having at least a 6 month cash reserve. The main reason most business's fail in the first year is due to being underfunded at the start.


            You will also need to take a hard look at your business entity. LLC's are not the best for raising capital if you are looking for investors.


            The first place to go for funding is yourself (saving, retirement, home equity), friends and family.


            Second you will need to setup your business credit profile with D&B, Experian, Equifax. You can setup credit accounts with most suppliers on a net 30 basis without much history or credit.  You can register your company with D&B at, the other agencies will get your info from your creditors as you debt service your accounts.


            Some startups also use debt financing (business credit cards). You will need to have good credit and 99% of business credit cards are nothing more than personal credit cards under the business name since you have to personally guarantee them and some like capital one are now reporting to personal credit reports regardless of paying on time.


            A startup loan from a bank will be very difficult to obtain with out having good personal credit and some of your own funds invested.


            Once the company has been operating and is generating cash flow, the company is more likely to qualify for a bank loan. You will need to have a good loan package put together and this process will typically take 7 - 10 business days and an average of applying at 2 different banks. Keep in mind that only about 47% of firms under a million dollars in revenues will obtain an approved loan.


            Word of caution, do not get sucked into credit ready corporations or so called aged corps they are almost always a scam. I only know of one company the sells legit aged corps and there is no credit attached to them. Also you do not have to pay for business credit building, most suppliers are startup friendly and will report your business credit.


            Good luck in your new business venture.

            • Re: Finding Funding for my new business
              GMFS Adventurer

              good tips in here. I didn't know about the aged corp. scam. I almost purchased one because I wanted to get a head start. It's a good thing I didn't. So why would it be better to incorporate in Nevada instead of somewhere like Deleware?

                • Re: Finding Funding for my new business
                  maestro274 Adventurer

                  There are several adavantages in Nevada coporations over other states. Nevada corporation are the best for asset protection. Nevada corporations have fewer tax requirement and are not required to pay state taxes, althought this has been challenged in California. If you are ever required to go to court over Nevada corporate rules, the Nevada Corpooration Commission will represent you.They even have a 100k guarantee that the veil be coporate personal can never be pierced unless there is a willful act of fraud commiutted by you. Dependent on who sets up the corporation you can get assistance in building busness credit and they will also assist you in getting business loans, They have lenders that work specifically with their clients. Miniumum credit score 650. The main advantage for a Delaware corporation is that they the best suited for if you plan on going public.

                  • Re: Finding Funding for my new business
                    Erik Salmon Scout

                    Aged corporations are nothing more than a corporation that was setup and exist on paper only and has no physical location other than in most cases the resident agents address or the incorporation companies address. They become a scam when they are sold with the idea that they are credit ready or have so called credit lines attached to them when in truth they have never been in true business operation and if they do have any credit it was built at the location of the resident agents or incorporation company's location and are usually just suppliers. Banks do not grant credit to these kind of companies unless they have been fraudulently presented as a real business in operation.


                    The only reason to start with an aged corp. is to help meet a lending criteria of age of the company, for example you want to start a taxi company and need to have been in business for 2 or more years to get leasing. You would still have to show your ability to debt service the credit and would still have to build out a business credit profile. However you would need a corp that was setup and has not operating history or credit built and maintained all the fee's and tax returns filed. I only know of 1 company that does this.


                    FYI, I just had a conversation with a secret service agent out of NY were I was helping him with an investigation on an individual that was taking thousands form people in an aged corporation with credit scam and the agents statement to me is that in every case he had investigated he had not seen any legit aged corporations being offered and that they have all been scams.

                  • Re: Finding Funding for my new business

                    Good discussion. Keep it up!  Let us know how the Community is helping , Joshua!



                    • Re: Finding Funding for my new business
                      jasminelane Adventurer

                      Firstly you should tell,which kind of business u want start?So you want loan?You can go throgh onliecashpayment sites for laon procedure.Describe your business in clear way,so that i can do your help

                      • Re: Finding Funding for my new business
                        phanio Pioneer

                        Since you are only seeking $4,500 to $5,000 - you are better off using personal resources - most banks or lenders won't waste their time with such small amounts.  Most business owners in your situation will use personal credit cards or personal savings to fund such a small amount.


                        If you don't have the personal credit to qualify for a $5,000 credit card - then you don't have the credit to qualify for a business loan - period.


                        You could try mirco credit loans - they can provide up to $35,000 for startup businesses but usually provide, on average $13,500 - these take time and they require a lot of pre-loan effort on your part.


                        Regarding payback - it depends on the type of loan.  Most lines of credit must zero out once a year or sooner.  Some working capital loans - those that are asset based - will be paid back when the asset is converted to cash.


                        Some take micro payments based on future revenue and are paid back slowly over time.  And, traditional terms loans are usually set at 12 to 36 months.


                        Do know that all of this is negotiable.


                        One last thing - building business credit is not really an option for startups or most small businesses.  You will just waste your time and money and have nothing to show for it but a small credit line at your local office supply store.

                        • Re: Finding Funding for my new business
                          Moderator Berta Guide

                          Great discussion everyone! Lots of good information for anyone starting a business.