How should we go about obtaining finance for a small business?
We are interested in buying a small cleaning business for around $35,000.00, which is in an area where we would like to move to.
We have around $150,000 equity in our home, and we plan to sell our house to move to this area. The simple solution is to sell our house and use part of the net proceeds to purchase the business, however, the business is available now, and we do not know how long it would take to sell our house. We do not want to rely on the house selling, so we need to secure finance elsewhere. Unfortunately we do not have a spare $35,000 in cash we can use.
I’ve looked into business loans, and it seems so involved for such a small amount, and quite risky as to whether you would obtain approval. Would it be better just to apply for a personal loan?
Another option would be to refinance our existing home loan and borrow extra to cover the business, but there would be no point doing that if we are going to sell. Ofcourse another option is to rent out our house (and we could rent in the area we move to) until we are ready to sell.
Another dilema I am unsure of, is if we go for a personal loan or refinance, do we tell the lender the truth (ie, that we’re both about to quit our jobs and move), because if we do, I dont know they would be willing to give us finance!
Help, I’m really confused and not sure where to start!!
The optimal solution to your problem cannot be ascertained with the information you have given in your question. There are simply too many other variables that could impact the decision.
First and foremost would be your credit quality and the creditworthiness of any co-borrowers. If you have a good credit profile, many alternatives to borrowing against your house exist, particularly if you are buying a strong business with a documented history of financial success. Even if you cannot qualify for traditional business financing, it is possible that you own other assets, such as stocks, bonds 401(k)s, and so on, that could be leveraged to give you the cash you need.
Another possible solution is owner financing. Since your time horizon is relatively short (hopefully), you could structure a short-term note to the current owner, with the balance payable at the time your home sells. Most people do not ever think of owner financing, but a majority of U.S. Business sales involve at least some seller financing.
If you haven’t already, I would recommend that you first familiarize yourself with some of the many business financing techniques available to you. You can read through an article I wrote at http://www.smart-business-financing.com/small-business-financing.html as a starting point. Then search for a trusted business financing professional who can take a comprehensive look at your situation and recommend plausible solutions. Since you will have a broad understanding of the different methods available, you will be in a better position to assess any recommendations you receive.
Hope this helps, and best of luck to you.
Personal or business loan? college student wanting to start to business.?
I am being presented with the opportunity to start a small business in light therapy and I am in need of the money to buy the equipment. The loan I need is only about $6,0000 and I am not having much luck finding information online about grants or about getting loans with low interest rates to start a business. The company may also have a financing option, my questions are: Are there really any grants out there for women wanting to start businesses?
would it be better to get a personal loan, a business loan or finance through the company?
The amount is $6,000. I don’t know what my computer is doing.
Your state, local groups and non-profits can be sources for grants. Grants are often offered in certain industries or for special purposes, like research for example. Would your light therapy business be research-related?
Here’s more information on grants from the Small Business Administration:
Before deciding on a loan source, I would compare the loan rates, including how long you need to pay off the loan. Sometimes a low introductory rate credit card can be a viable option if you know you will be able to pay off the credit card before the interest rate increases.
How much it costs to start a brick manufacturing business?
I am considering my options to start a small scale business in Tripura, NE India. Can you please provide me with the details/refer me to a place to find out all the details about brick manufacturing, starting with the kind of finance I need? Thanks!
7 to 10 lakhs on a small scale to start with.
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