Advice from bankers, or people w/ exp. w/ small business loans

You may have got a loan 5 years ago...not today. You probably need $50,000 liquid cash to get that kind of small business loan in this economy plus other assets.

 

On top of that you will likely need experience in the business that you are buying.


Will the seller owner finance?

 

Question about having your brother co-sign: Are you prepared to destroy your relationship with your brother? If you business fails, and the banks come after you for their money, they will go after your brother just as hard. He will be on the hook, legally, for anything you do that fails.

You may have the best intentions in the world, and brotherly love may seem like it trumps all, but if your business ruins his financial stability and credit, can you live with it? Can he? You say your brother already has businesses, if your business fails and he is unable to get credit and his businesses fail, how would your relationship turn out?

If your brother co-signs he is taking all of the risk with no reward.

 

do you have anything ongoing in terms of a business?

How do you intend to repay the loan? What turn around time are you looking at?

How many people are willing to sign their name on to your loan?

If you don't have much, and even with a great business plan, it will come down to the credit of the signers and like you mention assets...

Is this the mexican restaurant?

 

Without wasting 4 yrs of grueling business school and finance classes on the likes of you...

In short your chances are close to 0. Reason being, your lack of assets (Liquid or holdings), lack of experience, tightened credit, and the fact you are buying a business that may not earn enough for YOU personally to pay back the loan.

Theres a difference on keeping the lights on, and keeping your bills paid.

 

Sounds to me like perhaps you should be a little bit more patient ToyCen. Perhaps this is not the time for you to invest so much money in something if you don't have credit, assets, etc to get a loan on your own. I am not saying your business is going to fail and perhaps you have a solid strategy right now, but perhaps it is best to wait, even if you are going to miss out on a good deal.

You are only 26 and as long as you come up with a solid financial plan to be in a better position a few years down the road, it might be better just to wait. I do believe that you have to take risks in life, but I also believe you better have some solid cushion to fall back on if you fall flat on your face.

Best of luck.

 

These guys sound right up your alley: Intergalactic Bank

 

Just ask DD for a loan, he seems to have a lot of faith in you.....

 

You must mean revenue, not income.

 

They don't already have enough coffee shops in Roswell?

 

How much net profit did the business bring in for 2008, 2009, and 2010?
How much was it making when she bought the store for 450k ?
How is it doing for the first half of 2011?
Have you seen tax returns?
Do you know if the expenses are accurate?
Has your accountant seen the P&L statements and tax returns?
Does she run it as an LLC or sole proprietorship?
How much in assets are you buying?
How much goodwill are you buying?
What kind of earnings multiple do these types of franchises normally sell for?
Do you have any experience in the coffee/restaurant business?
How much will it cost you to transfer the franchise?
Will you have to go franchisee training?
How much are the franchise royalty fees?
Will you be forced to make any upgrades to the store upon transfer?
How much longer does the franchise license run for?
How much longer is the lease going to run?
Are the landlords willing to extend the lease upon transfer?
How much would it cost you to get an alcohol license?
Are you looking to buy the store to buy a job (ex. working 12 hours a day so you have low payroll costs)? or are you looking to try hire a manager to be able to run this store so you can look to expand into other stores? (E-Myths revisited would be a good book for you to read)
How are you going to organize your business? LLC? C-Corp? S-corp? Sole proprietorship?

There are a ton of other questions to ask, but why is she selling? If she isn't really working at the store and she already has enough employees to be an absentee owner and still have the store produce a good amount of cash....then why is she selling this cheap?

 

Sounds like you have the makings for a small biz loan, take those balance sheets and revenue stream numbers to a bank to see what they say.

Also, the government sometimes gives SBL's...check there too.

DD

 

Or tell her you will give her $200k if she lets you pay it off over 10 years....



DD

 

pretty much all of this time 100.

The big thing is see her taxes and bank statements. You can to see in and out and what is going on and what her incoming merchant and cash taken in. This should all be documented. This is all a must.

If the business checks out perhaps a bank might go for it.

 

Toycen, you're only 26? I always assumed you were a middle-aged man.

 

I'm sure she can be convinced.