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    3 Replies Latest reply on Jun 22, 2008 9:35 AM by DomainDiva

    young and laughed at.  Need insight on loan information.

    jadepwinters Newbie
      I am 23 years old, my husband is 25. We graduated from college about a year ago and want to open an insurance agency. We have been through all the formal processes with an insurance company and have been approved to open. We estimate we need $40K to start the business. My husband is an engineer and makes $52K per year. He has been at his job since he graduated from college, which is exactly one year. I do not work. He will finance the business as much as he can with his income alone. We do not own a home, we have no debt, and excellent credit. We own our vehicles outright and have $12K in mutual funds, $4K in savings, and $10K in assets. My husband will continue to work while I get the insurance agency off the ground.
      This week I went to a bank to inquire about a loan (not Bank of America) and they were rude and pretty much laughed me out of the door. I could not figure out why a bank would not even run my credit and check into my background before telling me no. They asked about the assets and savings mentioned above but that was it. They told me I would not even qualify for a SBA loan. Im confused....people open up new businesses all the time and there is no way they fund them 100% by their OWN money, friends, or family.

      If anyone has any insight on this as to why I got "laughed" out the door and a suggestion for a next step I would really appreciate it. Thanks.
        • Re: young and laughed at.  Need insight on loan information.
          Lighthouse24 Ranger

          You mentioned that "people open up new businesses all the time and there is no way they fund them 100% by their OWN money, friends, or family." According to Inc Magazine, here are the top ten basic sources of seed funding for a small business start-up:

          Number 1 on the list is personal savings, which is where 79 percent of one-person businesses get their start-up capital. (About 480,000 new businesses were established and capitalized that way last year, according to government data.)

          19 percent are funded by (2) family and friends, (3) getting a second job, (4) obtaining a home equity loan, (5) utilizing personal loans and credit cards, and (6) borrowing from a 401k or other retirement account.

          The remaining 2 percent are funded with help from (7) SBA loans, (8) seed funding entities (such as university-sponsored business incubators), (9) angel investors and venture capital firms, and (10) traditional lenders.

          So one reason you might have been taken less-than-seriously at your bank is that a bank is probably the least likely place to find what you were seeking.

          Obviously, several of the top ten options above are not applicable for you, but some might be. For example, the average starting salary for college grads this year is around $46,500. You mentioned that you're a college grad, but not working -- so if the two of you are able to make ends meet like that, one option would seem to be for you to work for a year, save almost all of your income, and then launch the business fully capitalized (with your personal credit even stronger than it is now).

          Have you developed a business plan? That's essential no matter what funding path you pursue (but especially if you're approaching lenders or investors).

          It sounds like you guys are starting out on the right track -- no debt, good credit, education, and a business vision. You should be able to make it happen with a good business plan and a little patience.

          Welcome to the community and best wishes.
          • Re: young and laughed at.  Need insight on loan information.
            LUCKIEST Guide
            Young and laughed at. Welcome

            Lighthouse always has great infomation. You and your husband are both young, however
            No bank should be rude and show you the door. Have you tried another bank?
            Get over the "laughed out the door" and get back on track to become successful.

            Do you know about SCORE?? SCORE is FREE and can help you succeed.
            SCORE can help you write a Business Plan (which is a must) for a loan.
            SCORE can also open doors with bankers and also help clarify your confusion.

            Good luck, LUCKIEST
            • Re: young and laughed at.  Need insight on loan information.
              DomainDiva Ranger

              Just an expansion of Lighthouses' answer here.

              I was laughed at for several years because the idea itself was dumb and I did the VC route as well. Nothing.

              After cashing in IRA's, and pouring my own money into it I found an angel who has helped. He has not bankrolled us...his investment monies are for programming and code only. Some of my team are working for nothing except stock options. I am not taking a salary and and still work as a consultant to pay bills. I have purchased computers and software for my developers and designer on my own nickle and the jewelry is next on the block. We start beta test in several weeks. To market by the end of the year. No VC money and one guy told me it would take millions to do this and we would never get it done..blah blah.

              Bottom line. No one will do it for you. SInce you are young, you can afford to take the financial chance by using your own capital. Talk to friends and family as well. (My angel is a long time friend). It seems as though you may already have 1/2 of the money you need. The insurance company that you will be representing may have a finance plan as well with your 1/2 down payment.

              Your chances for success are greater if you risk what you own, not what someone else gives you.

              AS for why the bank people wre rude...well manners don't count much anymore and now you know what people not to do business with.