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Started By
Message
Starting a small business and next steps?
Posted on 4/19/16 at 9:25 pm
Posted on 4/19/16 at 9:25 pm
1. Web site domain secured.
2. Social media outlets secured.
3. Logo created.
4. Business entity formed.
5. Attorney secured.
6. CPA - have three in mind to interview.
7. Business plan 95 % completed (will be wrapped up by tomorrow).
8. Real estate for location identified (while completing business plan).
and ...
9. Meet with local banks and/or credit unions to look at SBA 7a loans.
This is where my question comes in. Obviously a business plan is necessary and I can say with certainty, I am better for the experience.
Who typically (in terms of title) will I meet with? A business banker? Appointment necessary?
With SBA 7a loan (assuming this is what I will need), does it pay to "shop" around? I personally bank with USAA and love their service (won't switch from a personal standpoint), but realize they don't offer anything on the business side and believe I will need that "personal" relationship. I'm cautious of every other bank because of "fees." Who should I consider locally (Baton Rouge area)?
And lastly, how long does it take for approval / denial process?
Lastly, I've also created an operation's manual, identified third party vendors (background checks, alarm company, credit card merchant providers, website design, software providers, VoIP, Internet providers, etc.) - working ahead on these to be prepared, but not necessary for steps above (except a small mention in business plan).
2. Social media outlets secured.
3. Logo created.
4. Business entity formed.
5. Attorney secured.
6. CPA - have three in mind to interview.
7. Business plan 95 % completed (will be wrapped up by tomorrow).
8. Real estate for location identified (while completing business plan).
and ...
9. Meet with local banks and/or credit unions to look at SBA 7a loans.
This is where my question comes in. Obviously a business plan is necessary and I can say with certainty, I am better for the experience.
Who typically (in terms of title) will I meet with? A business banker? Appointment necessary?
With SBA 7a loan (assuming this is what I will need), does it pay to "shop" around? I personally bank with USAA and love their service (won't switch from a personal standpoint), but realize they don't offer anything on the business side and believe I will need that "personal" relationship. I'm cautious of every other bank because of "fees." Who should I consider locally (Baton Rouge area)?
And lastly, how long does it take for approval / denial process?
Lastly, I've also created an operation's manual, identified third party vendors (background checks, alarm company, credit card merchant providers, website design, software providers, VoIP, Internet providers, etc.) - working ahead on these to be prepared, but not necessary for steps above (except a small mention in business plan).
This post was edited on 4/19/16 at 9:31 pm
6
Posted on 4/19/16 at 9:44 pm to Will Cover
I would decline you unless you actually owned real estate as collateral.
You have no history of cash flow and business plans are rarely accurate. I hope you have significant cash, because that could help. What is your credit score and personal debt obligations? I would want you as a personal guarantor. Do you have a life insurance policy? See it's not that black and white.
You have no history of cash flow and business plans are rarely accurate. I hope you have significant cash, because that could help. What is your credit score and personal debt obligations? I would want you as a personal guarantor. Do you have a life insurance policy? See it's not that black and white.
Posted on 4/19/16 at 9:49 pm to Rhino5
quote:
You have no history of cash flow and business plans are rarely accurate.
From a business perspective, you are correct (concerning cash flow). I'm confident that the data I cited in my business plan is correct. Projections are, well just that, however the industry that I am looking to change into is very solid and growing.
quote:
I hope you have significant cash, because that could help
Based upon the amount I believe I will need, I have more than 20 %.
quote:
What is your credit score and personal debt obligations?
Median FICO score is above 800. Only debt I have is my truck (at 1.99 % interest on an unsecured loan, this is free money). The house is listed in my wife's name only. Together, we have no credit card debt.
quote:
I would want you as a personal guarantor.
Wouldn't an LLC prevent this?
quote:
Do you have a life insurance policy?
Yes, a rather large one.
quote:
See it's not that black and white.
I don't believe I indicated in my original message that it was. The amount of time, effort, research and energy I have put into where I am right now isn't easy, but very necessary.
quote:
I would decline you
Which bank do you work at? I want to scratch you off my list.
This post was edited on 4/19/16 at 9:53 pm
Posted on 4/19/16 at 9:54 pm to Will Cover
Posted on 4/19/16 at 9:56 pm to oldschoolqb
quote:
oldschoolqb
This post was edited on 4/19/16 at 9:57 pm
Posted on 4/19/16 at 9:57 pm to Will Cover
No, being an LLC doesn't prevent you from Having to be a guarantor. Banks don't allow people to buy a cheap business license, borrow money and get away Scott-free if it goes bad.
BuIness based/coded loans can keep a business loan off your personal credit score/record, but if shite hits the fan, the bank and judge are coming after the guarantor.
BuIness based/coded loans can keep a business loan off your personal credit score/record, but if shite hits the fan, the bank and judge are coming after the guarantor.
Posted on 4/19/16 at 10:00 pm to Will Cover
You never answered me if you owned the real estate....? Or are you wanting to rent space?
Posted on 4/19/16 at 10:08 pm to Rhino5
quote:
BuIness based/coded loans can keep a business loan off your personal credit score/record, but if shite hits the fan, the bank and judge are coming after the guarantor.
Perfectly understandable and acceptable to me.
Posted on 4/19/16 at 10:08 pm to Rhino5
quote:
You never answered me if you owned the real estate....? Or are you wanting to rent space?
I prefer to own the land, however I understand that may be difficult to do, given that I am a newly formed entity.
I'm certainly open to leasing space in the right location.
This post was edited on 4/19/16 at 10:09 pm
Posted on 4/20/16 at 8:07 am to Will Cover
quote:
I would want you as a personal guarantor.
Wouldn't an LLC prevent this?
No and any line of credit you're seeking for inventory purchases, sub-consulting, etc. Unless you cut a check, most places are seeking a personal guarantor unless you've shown you've been in business a while or have a great relationship with the sales person.
Posted on 4/20/16 at 9:46 am to Will Cover
Make sure to go over the pros/cons of filing as an LLC or S-Corp.
Posted on 4/20/16 at 3:17 pm to lsupride87
quote:
Make sure to go over the pros/cons of filing as an LLC or S-Corp.
or llc taxed as a scorp.
Posted on 4/20/16 at 4:17 pm to diat150
quote:That is what I am referring. Most likely, LLC will be the way to go. However, filing as an S-Corp maybe beneficial if he makes enough money
or llc taxed as a scorp.
Posted on 4/20/16 at 7:46 pm to Will Cover
Will, to answer the questions you asked, you will meet with a loan officer who is an SBA certified lender in most cases. This person can be a small business banker or a commercial lender, depending on the bank and how they're set up. Their title will be Vice President in most cases and I would recommend scheduling an appointment.
At this point in your process, I wouldn't be concerned about the fees or rates. The problem will be finding an avenue to approval. Banks simply won't fund a startup. The SBA fills part of that void, but not all of it. Assuming you can work your way to approval, the rough parameters will be Prime + 2% for your rate, a 2% origination fee and another 1-3% in fees - so at most, 5% of loan amount in fees. These are negotiable, to an extent.
Think of this process as the opposite of buying a new car - the dealer will do just about anything to get you into that new car today. The bank will do just about anything to decline your request today. Keep that in mind as you formulate the strategy to get approved. Your lender will discuss all the variables with you and should offer good suggestions based on the details you're able to provide.
If I remember correctly, this is a franchise opportunity. If the franchisor is approved with the SBA, that will be a big help. If not, it can be more challenging. Another big advantage is there are existing franchises out there that you can reference for cash flow and profitability pro forma statements.
Be ready for some frustrations, but nothing too bad, just hoops to jump through. Once the application is submitted your answer will be fairly quick - but it can take several iterations before submission. Your house being in your wife's name only is going to be a red flag, consider now what it will take for you to be added to title and the home pledged as part of the collateral package.
You seem to be on a really good track here, don't get discouraged, be ready for things to go slower than you'd like and spend some time working on funding plans B, C and D, you just never know. Good luck!
At this point in your process, I wouldn't be concerned about the fees or rates. The problem will be finding an avenue to approval. Banks simply won't fund a startup. The SBA fills part of that void, but not all of it. Assuming you can work your way to approval, the rough parameters will be Prime + 2% for your rate, a 2% origination fee and another 1-3% in fees - so at most, 5% of loan amount in fees. These are negotiable, to an extent.
Think of this process as the opposite of buying a new car - the dealer will do just about anything to get you into that new car today. The bank will do just about anything to decline your request today. Keep that in mind as you formulate the strategy to get approved. Your lender will discuss all the variables with you and should offer good suggestions based on the details you're able to provide.
If I remember correctly, this is a franchise opportunity. If the franchisor is approved with the SBA, that will be a big help. If not, it can be more challenging. Another big advantage is there are existing franchises out there that you can reference for cash flow and profitability pro forma statements.
Be ready for some frustrations, but nothing too bad, just hoops to jump through. Once the application is submitted your answer will be fairly quick - but it can take several iterations before submission. Your house being in your wife's name only is going to be a red flag, consider now what it will take for you to be added to title and the home pledged as part of the collateral package.
You seem to be on a really good track here, don't get discouraged, be ready for things to go slower than you'd like and spend some time working on funding plans B, C and D, you just never know. Good luck!
Posted on 4/21/16 at 5:18 am to Will Cover
you'll find out your biggest problem is not securing SBA loans ... ...but what to do with all the fricking cash!
Posted on 4/21/16 at 9:10 am to Will Cover
1. Web site domain secured.
2. Social media outlets secured. done
3. Logo created. done
4. Business entity formed. in process
5. Attorney secured. brother
6. CPA - have three in mind to interview. father-in-law
7. Business plan 95 % completed (will be wrapped up by tomorrow). done
8. Real estate for location identified (while completing business plan). done
it sounds like we are in very similar situations. I've done some shopping around through banks and the SBA 7a and micro loan program and even with collateral it'll be tough to get the financing here in Lafayette bc of the Oil & Gas industry. I'm currently exploring all financing options(except loansharks)
2. Social media outlets secured. done
3. Logo created. done
4. Business entity formed. in process
5. Attorney secured. brother
6. CPA - have three in mind to interview. father-in-law
7. Business plan 95 % completed (will be wrapped up by tomorrow). done
8. Real estate for location identified (while completing business plan). done
it sounds like we are in very similar situations. I've done some shopping around through banks and the SBA 7a and micro loan program and even with collateral it'll be tough to get the financing here in Lafayette bc of the Oil & Gas industry. I'm currently exploring all financing options(except loansharks)
Posted on 4/21/16 at 11:17 am to Will Cover
quote:
Will Cover
Will, have you investigated the advantages of having a "Woman-owned business"?
Posted on 4/21/16 at 11:31 am to GFunk
quote:
Will, have you investigated the advantages of having a "Woman-owned business"?
Any of the WOB, MOB, SDB, etc. can really help.
Posted on 4/21/16 at 11:40 am to GFunk
I've considered having my wife's name on everything and co-signing on it.
Definitely some positives to being not a white male in that regard
Definitely some positives to being not a white male in that regard
Posted on 4/21/16 at 3:41 pm to GFunk
quote:
Will, have you investigated the advantages of having a "Woman-owned business"?
I can't say that I have. For you to ask, it must be something pretty significant?
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