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    4 Replies Latest reply on Sep 15, 2008 11:06 AM by LUCKIEST

    Getting money with no money.

    genie_m_ross Wayfarer
      Hi, I am in the beginning stages of opening a salon/spa. I am going into this with a partner. We are not yet sure if he is going to be part owner or if we are going to be a sole pro at first.

      To get to the point, we are both very young and really don't have any money or assests to put up for the business. I assume the bank will laugh in my face if I walk up with a good business plan and no money and ask to borrow 300,000. My father (who has incredible credit and makes a fare amount of money) is willing to sign the loan stating that if i default he will take over the loan payment. Is there an option for this, or will the bank frown upon this?
        • Re: Getting money with no money.
          credittalk Wayfarer
          First things first do you and your partner have good credit? If your cosigner has a stronger history and good trades i suggest using him and only him on the corporation to get the loan. Then you and your partner add your self to the corporation if thats how your filing. It's easier to get funds as a llc then corporation in my opinion that's my opinion. We help people everyday trying to get money or the business. For futher information give us a call maybe we can help 1(877) 47-fresh Fscorponline.com Corp
          • Re: Getting money with no money.
            GrowthCurve Adventurer

            The first thing you need to do is decide how you're going to set up your business. You can be partners in the legal sense of the word and still be a sole proprietorship. A sole proprietorship means exactly that -- a "sole" proprietor.

            If you are both working together in a business, the fact that you've even said, "Let's be partners," makes you a general partnership until you do something different. You don't want that as you are as liable for the actions of your general partner as much as you are your own.

            Bottom line, you need to form an entity, either an LLC or a corporation. Talk to a good CPA to find out what is best for you.

            As for borrowing, you're right...with no assets, most banks are not going to look favorably upon this request. However, if your father could qualify for a loan for the $300,000, then the bank could make the loan to your business with your father as the guarantor. Having said that, if the bank does not think that you can make a go of your salon business, then they are likely to just ask that the loan be made directly to your father, and then he can, in turn, invest the money in your business.

             


            A bank will not make a loan to a business knowing that there's a poor chance of repayment without a guarantor, and they don't want to go through the legal process of using the guaranty when they can just have your father on the hook personally from the beginning.

             


            $300,000 sounds like an awful lot of money for this venture. Are you sure you can't just find an existing business and buy that instead? Also, is this really the best time economy-wise to start this kind of service? I could see buying one cheap that has fallen on hard times and then wait for the turnaround, but I can't see starting this business from scratch today, unless you are working with a very upscale neighborhood that has little competition.

             


            Are you really prepared to actually run a business? It all sounds so easy, but it's very, very hard. I would seek out a mentor, if possible. Do you have a local university with an entrepreneurship program? How about a SCORE office?

             


            I wish you well.
            • Re: Getting money with no money.
              LUCKIEST Guide
              Getting money with no money,

              Who are you??, Where are you?? You have previous posts. Go to Members page and share some info.

              GrowthCurve gave you some great info. You will need a Business and Marketing Plan for the Bank.

              SCORE can help. SCORE is FREE both in person (don't know where you are) on online.

              Having somebody (like a father) guarantee the loan should make it easier.

              Good luck, LUCKIEST
              • Re: Getting money with no money.
                LUCKIEST Guide
                Getting money with no money.

                Great answer from GrowthCurve. If you are going to a bank, you will need a Business and Marketing Plan.

                Do you know about SCORE?? SCORE is FREE.

                LUCKIEST