Applying for a Small Business Loan

25 replies
Alright guys n gals, I wanted to get some extra capital to really take the bull by the horns in 2010, and get a good mentor, or at least someone to help me plan everything out, and have the cash to hire freelancers as I need them (writers, designers, etc).

One option I've come to is a Small Business loan, and now I know that most banks have their hands tight around their cash, but what would be a way that maybe I could get this loan, you think?

Or maybe another way to make some startup. I'm thinking several thousand here, maybe $5k or more, depending.

I am still working on other things at the moment, but I wanted your opinions on this.

Thanks in advance folks,

-Sean
#applying #business #loan #small
  • Profile picture of the author Teresa Coppes
    While I think it's great you want to expand upon your business I don't think going in to debt is the way to do it. There are so many free avenues to take - try working those to increase your revenue to pay for the additional services you want to outsource such as writers. Put at least 50% back into your business and in no time you would far surpass the initial $5,000 and have no debt repayment.

    Good luck in whatever you decide!
    Teresa
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    • Profile picture of the author theemperor
      My belief is you can scale up an internet business without taking on debt, you just get better and better at IM techniques rather than scaling up the medicore ones. I can see the temptation of taking on debt when interest rates are low and the yield you get in IM can be very high. But I really think you don't need to borrow.
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  • Profile picture of the author MichaelHiles
    Google was started with credit cards.

    That is sort of the standard "small business" loan these days for startup operations.

    We'll see what comes of the small business lending stuff being blabbered in DC right now, but I suspect that if you're not a minority with a government contract for some outsourced services in hand, you're not going to get any "stimulus".
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  • Profile picture of the author jacktackett
    Michael is correct - most founders of companies today use their personal assets to start a business - savings, credit cards, equity lines etc. You might be able to get a 5K loan but you'll have to personally back it with something.

    You'll find a lot of SBA etc loans are tied to something a bank can take in case you default or the business doesn't succeed. They really don't like lending to startups given the very high odds of the start up failing.

    To be frank - you're time is better spent finding a market and serving it rather than tying up your time in the paperwork to get a loan. Start small and prove the market THEN worry about getting the money to expand. Kinda funny but once you can prove you're making money people won't mind loaning some to you to make more - PROVIDING they're comfortable with getting their money back.

    Many companies have been founded and kept afloat with credit cards and other personal dept instruments. Very few with small business loans.

    Good luck!

    best,
    --Jack
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  • Profile picture of the author Sparhawke
    Most of these government agencies are staffed by morons who will look at you like a piece of crap if you have any idea of bettering yourself by actually going out and doing something.

    What you are far better doing is actually first going to get the name and the hosting you want, get a general layout quote and then go to family and friends and offering them shares in your new venture.

    If you offer them 1% for $10-100 this will get you to $5-10k and you have a very real plan for advertising or monetization you may get some backing, maybe not a lot but if you have a past history of making successful sites that actually made money over the course of a year you will have better luck.

    Imagine if you figure out how to make a car repair forum and manage to get 100 spaces of advertising filled each month plus affliate links, thats your money back right there and your "investors" will be really pleased at a monthly income so long as it is running.

    The important thing here though is to be upfront, if it is going to be a year before anyone sees a return of any kind, tell them that...also make it known what constitutes profit and how much you take out for your salary before they ever get to see anything, including their money back. You really don't want 100 neighbours to come looking for you with torches and pitchforks in the middle of the night :p
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  • Profile picture of the author John Romaine
    I dont think theres anything wrong with borrowing to invest. Its a natural part of doing business.

    To give you the heads up though, I just recently applied for a small loan to do exactly what you mention in this thread, and was denied. I originally applied for $20K and it was declined, then I lowered it to $7K, then $5K. All of my applications with numerous lenders were declined. I have a good credit history, I have NO debts, and I actively invest in property.

    There reasoning - ALL of them siad the same thing...

    "We dont see internet businesses as tangible assets"

    No joke, Im not kidding. Whether this is due to the current economic climate or whatever, it seemed the minute I mentioned "internet business" they became less responsive and more reluctant to lend me money.

    My advice. Tell them only what they need to know. If you have to - put it through as a car loan or a holiday loan. And if you do end up putting it through as a business loan - be sure to write up a projected earnings and business plan.

    Good luck dude.
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  • Profile picture of the author Sparhawke
    One thing I will mention here at the end is "DO NOT OVERVALUE YOUR BUSINESS"

    Until it actually starts making money it is not worth a damn thing, people will not even entertain the idea if you give them some wild valuation of $1,000,000 for a vague idea...yet they may have a punt if you value it at $10,000 with a very real plan.
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  • Profile picture of the author Quentin
    Personally I think borrowing money for an Internet business is crazy as you have no real assets to acquire.

    If you can't generate 5k from doing some basic online venture with zero startup then there is a good chance you will blow your investment.

    Learn how to generate 5k online with nothing then you will have a much stronger business plus a new product to sell if you document it all.

    I started with nothing and that was the advice I was given and it worked. Its the hard way but probably a better foundation.

    I start my mission work with Orphans next year (2010) and I will raise all the money online from nothing so I know it is possible.

    Q
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    • Profile picture of the author John Romaine
      Originally Posted by Quentin View Post

      Personally I think borrowing money for an Internet business is crazy as you have no real assets to acquire.
      I disagree. Its a perception issue on behalf of most lenders, thats all.

      I was spoken to at the bank like I sat at my computer all day browsing youtube and facebook - they had no understanding of the nature of the business I was involved in - nor did they care.

      It was frustrating to say the least.

      Suggesting that my primary internet business is not an asset is absolute rubbish. It was providing me with a steady form of income, for more than 5 years. Infact towards the end before selling it for $25,000 it made more income than I got at my state government job.

      Internet business is no different from ANY form of business, and in business you need financial backing in order to grow and develop.
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  • Profile picture of the author Sparhawke
    Which is why having a past performance is better, even if you have one small site that makes $1000 every few months people will see that and know that they may get their money back eventually.
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  • Profile picture of the author Arizona
    Great feedback everyone. I agree that if you go to the bank and tell them that you are an internet marketer and would like to inquire about a loan, most bankers are going to look at you like you are crazy.

    I agree with the gal who said that you are much better off at being patient until you make a little money and then put that money right back into your business. That is exactly what I am doing and it is working. Not as fast as I would like, but it is working. It also helps a LOT to have a team approach in your efforts, meaning getting with others who have already become successful. That is exactly what I am doing.

    Good luck with whatever you decide. I hope 2010 is a profitable year for everyone.

    Read more at Team National/National Companies
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  • Profile picture of the author Buildingfutures
    Well, I thank you all for your opinions, and its not like I could have gotten the loan, I've got no credit, no co-signers, no nothing. Haha.

    I was just exploring it as an option maybe for later ventures.

    I still don't even have my first credit card. I should have had that years ago. But even then, I couldn't get approved. Maybe after I get everything rolling, have a tangible 'real world' job for a bit and get settled in they might consider me for something.

    Building credit now is possibly one of the hardest things I've ever done.

    -Sean
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    • Profile picture of the author MichaelHiles
      Originally Posted by Buildingfutures View Post

      Well, I thank you all for your opinions, and its not like I could have gotten the loan, I've got no credit, no co-signers, no nothing. Haha.

      I was just exploring it as an option maybe for later ventures.

      I still don't even have my first credit card. I should have had that years ago. But even then, I couldn't get approved. Maybe after I get everything rolling, have a tangible 'real world' job for a bit and get settled in they might consider me for something.

      Building credit now is possibly one of the hardest things I've ever done.

      -Sean

      Get a deposit guaranteed card from one of the companies that specializes in such a thing. I think you can even open an account for $200.
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      • Profile picture of the author Buildingfutures
        Mike, Thanks! I will definitely look up those companies and see if there are any around my little area of texas.

        Ramone, my girl says you give good advice, as she was just about to tell me the same thing, lol.

        Thanks again guys, I'll be working hard on everything I do in the upcoming year. No retreat, No surrender!

        Excelsior!

        -Seam
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        • Profile picture of the author Sparhawke
          Originally Posted by Buildingfutures View Post

          Mike, Thanks! I will definitely look up those companies and see if there are any around my little area of texas.

          Ramone, my girl says you give good advice, as she was just about to tell me the same thing, lol.

          Thanks again guys, I'll be working hard on everything I do in the upcoming year. No retreat, No surrender!

          Excelsior!

          -Seam
          When you go to lenders it may be a good idea to know how to spell your name as well...just saying lol
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          “Thinking is easy, Acting is difficult
          And to put one's thoughts into action is the most difficult thing in the world ~ Goethe”
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          • Profile picture of the author Buildingfutures
            Originally Posted by Sparhawke View Post

            When you go to lenders it may be a good idea to know how to spell your name as well...just saying lol
            Have you spelled your name wrong on an app before? Haha!

            Dogscout, I've never been one to buy overpriced things, ever. I'm always the one my friends are asking why I always go to wal-mart or the dollar tree. Ha!
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      • Profile picture of the author DogScout
        Originally Posted by MichaelHiles View Post

        Get a deposit guaranteed card from one of the companies that specializes in such a thing. I think you can even open an account for $200.
        Make sure they report to D&B 1st!
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    • Profile picture of the author Ben Roy
      Hey, one option for you that I've seen work personally is to consider teaming up with someone else who has assets (and maybe experience). It depends somewhat on what you're planning to do and what your business is, but you may be able to find someone that would bring money and experience to the table while you bring grunt work and drive. Especially if the numbers aren't too huge, I think this can be quite viable.

      On your original question, personal debt is really the only reasonable way to make this stuff happen. You'll probably have to personally guarantee any loan anyway, and the hoops to get an actual small business loan can be pretty time consuming.
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    • Profile picture of the author John Romaine
      Originally Posted by Buildingfutures View Post

      Well, I thank you all for your opinions, and its not like I could have gotten the loan, I've got no credit, no co-signers, no nothing. Haha.

      I was just exploring it as an option maybe for later ventures.

      I still don't even have my first credit card. I should have had that years ago. But even then, I couldn't get approved. Maybe after I get everything rolling, have a tangible 'real world' job for a bit and get settled in they might consider me for something.

      Building credit now is possibly one of the hardest things I've ever done.

      -Sean
      Go to a few lenders. Tell them what you are planning and ask them for guidance and advice. At least that way you know you're working towards a specific outcome with a goal in mind.

      Dont get hung up on one lender either, speak to a few of em.

      Good luck.
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  • Profile picture of the author DogScout
    it takes starting small and stupid. You can find companies that will lend small amounts by selling you crap for $100-$200 and reporting the repayments to D&B

    Then you find some one that will do more, again many of those services are overpriced but report to D&B and are willing to take the chance.

    the 3rd step can be a cash loan, probably in the 1-5k range, again you need to be sure they report to D&B.

    Now, you can borrow 40-150k, many times unsecured. That process can take 6-12 months. If your credit is good and you can co-sign, or have real assets you are willing to be attached, you can move that process much faster.

    My personal take is NOT to bother with the buying of overpriced things and services just because they report. If you want to go that route, I can name 3-5 places that you can start with. I am out of town until 1/18 or so and all that info is there but if you IM me, I believe I can remember a couple or three. (# would be all you'd need on the 1st level anyway.) If you do need to buy something, see if you can find a place that sells that and reports. It will still cost more than you could buy the same thing elsewhere, but what they are really selling is the good D&B account. (I actually think I have an office supply place, that makes you pay upfront and then reports a good loan paid in full to D&B. Their prices are a tad high though.)

    (BTW SBA will many times require collateral of a real nature... such as real estate or other non-perishables. Personally, I'd not consider them in any case unless as stated you are a minority woman with a disability)
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  • Profile picture of the author DogScout
    (BTW, If you have an income with Paypal or other merchant over $2500.00 in one month, you can self report that information to D&B, or so I was led to believe. Not sure how one would do that, but after you had a D&B number I am sure a rep could point you in the right direction.)
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  • Profile picture of the author DogScout
    Capital One will do secured credit card for $500... if you can handle paying 28% interest on your own money! Predatory lenders, but I guess in the beginning, most are.
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    • Profile picture of the author Buildingfutures
      Originally Posted by DogScout View Post

      Capital One will do secured credit card for $500... if you can handle paying 28% interest on your own money! Predatory lenders, but I guess in the beginning, most are.
      Right now I can't handle playing anything to anyone, haha! But maybe here soon, I'd really like to start getting things rolling. I'll meet with some lenders after the new year, definitely. So next monday I will let everyone know what these lenders have told me, and what I can do and plan to do in the upcoming year to grow my score.
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  • Profile picture of the author John Romaine
    Here man, have a geeze at this - its a business plan reference sheet. Not sure if it will help you - but it sure will make you look better prepared and more professional when approaching lenders.

    Anyone else is free to grab a copy - be sure to press the thank you button so I feel all warm and fuzzy
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  • Profile picture of the author matts5150
    Loans are very hard to come by right now unless you've got collateral. You might try some of the social lending sites like lending club and prosper. I ended up having to go that route, even though I own a site that sells physical products the failure rate is so high on internet companies unless it's tied to a brick and mortar or at least an office away from your house most banks don't consider the business real.
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  • Profile picture of the author jodyheath
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