The new forums will be named Coin Return (based on the most recent vote)! You can check on the status and timeline of the transition to the new forums here.
The Guiding Principles and New Rules document is now in effect.
Teach me about loans
DirtyDirtyVagrant
Registered User regular
Registered User regular
I need to borrow $28,000. From a bank or from a family member.
I have shitty credit. (~544)
So if I try to borrow from a bank, what am I looking at? Is there any way I can pull it off? With a cosigner?
Is this something that I can sell? I mean could I put together a proposal? Create a business plan? How does one do these things?
I ask because a huge opportunity has presented itself and I really really want to bite.
I have shitty credit. (~544)
So if I try to borrow from a bank, what am I looking at? Is there any way I can pull it off? With a cosigner?
Is this something that I can sell? I mean could I put together a proposal? Create a business plan? How does one do these things?
I ask because a huge opportunity has presented itself and I really really want to bite.
DirtyDirtyVagrant on
0
Posts
Nobody is going to give you $28,000 of unsecured debt with a 544 credit rating. Even if a good economy that would be hard.
we also talk about other random shit and clown upon each other
I might be able to talk my dad into it. I'm just not sure how to put it together and present it.
I'm trying to buy a business. It's profitable, it's well established, it's been around for over five years.
So I mean...what? I have records of all the expenses and the revenue for the last...forever, and I can show that the store is profitable and that I am capable of repaying the money.
Do I write like a five year plan? Or something?
You can also get small business loans and I would think that a business would be a asset that can secure debt.
And you're saying that I can leverage the business itself against the loan as equity?
That's not the same thing as equity, but yes in a business setting you have to convince a bank that you can actually make money. But they still check your credit and you'd have to give them a lot of reasons to overlook yours.
we also talk about other random shit and clown upon each other
Rejection. Go for the family member. A bank is going to want some serious collateral with that credit score, like a house, or a wheelbarrel full of gold.
I've got big plans for it. Big, big plans.
The store sees something like a $3,000 per month profit on average. That's with three employees on a $19,000 per year salary, with the lease and the utilities included. That's also without advertising.
So plenty of money just ripe for reinvestment. I could pay back a $28,000 loan in no time.
Completely irrelevant to the topic, but I'll humor you. I managed this particular store for a good while.
He's really desperate.
I'm...not planning on retiring after this. I just want to get my feet wet. And yes, my figures include two fulltime employees and myself on payroll as the owner.
Honestly, I'd go the family route if it all possible, but some may advise against doing business with family.
PSN: TheScrublet
Agreed, but with that score, I don't see how the bank is going to approve the loan.
OP: Does the 28K just cover ownership of the business and the lease, or does the current owner actually own the store property as well? I'm assuming not since it's only 28K, but just curious. You might see if the contents of the store, hardware, machines, etc are worth 28K and you can leverage those against the business.
Given everything I've seen in this thread, I would take the opinion of "your choices that led to your shitty credit screwed you out of this chance" rather than "get family involved in something that would leave them on the hook for 28K if circumstances go totally wrong." Particularly in this economy, with the commercial real estate market still teetering. I'm not trying to be a dick here, and it sucks, but if I was going to say anything positive about working with family, it'd be that it should only ever be done when both sides will lose equally. Even then things can go really bad but it's less likely.
Edit: to be clear, I'm not trying to be insulting with the first comment...shitty credit may just be you've never established credit. either way, it's irrelevant to my point.
PSN: TheScrublet
It's not irrelevant. If I'm a loan officer I'm going to ask you that question point blank and expect a non flippant answer.
I'm curious as to why he's selling it when the cashflow is presumably there. Immigration issues?
I'm just trying to stay on topic which is he wants a loan, and the bank probably isn't going to give him one.
He could get his family to give him the loan, and make them a silent partner to repay the loan at a percentage over 36 months.
He just wants out. He wants to wash his hands of the whole thing, and we've been friends for years. He came out and said that he'd just give it to me if he could. In, fact, that's basically what he's doing. He's still under some debt for the coolers and stuff, and he wants out. So he told me point blank that if I can come up with the money to satisfy that debt, that everything becomes mine.
It's a long and complicated story, but he owes the money to the previous owner, and he doesn't want to give that bastard the satisfaction of getting all his stuff back. Which is why he doesn't just surrender it.
He also told me that he would just let me take over and pay him after the fact, but that he can't do that because he technically doesn't own the stuff yet. So I've gotta buy out his contract, at which point I become the owner.
We like long and complicated stories though.
This store, when it was first founded, was owned and run by a man named Snehi (we call him Sam). Sam hired "Derrick" to be his manager about 2 years after the store opened, and things were mostly good, except Sam was a shithouse businessman. He was always doing shit under the table. Tax fraud, account skimming, selling food benefits, allowing people to buy alcohol/tobacco on those benefits...his primary client base was homeless people and drunks, and the people in the condos nearby got sick of it.
So they petitioned to have his liquor license pulled. And they succeeded. Months passed and the business was on the brink of failure. Then, one day, in an apparent fit of genius, Sam signed everything over to Derrick. Derrick opened his own corporation and took all the permits and licenses under his own name. The bank accounts too. Absolutely everything. In addition to that, they agreed that Derrick would pay for all the coolers, the shelving, the cash register, and all the store's merchandise in the amount of $27,700 (yes, you are reading that correctly - Derrick never paid one red cent) The entire thing was a poorly planned ruse, held together only by Derrick's seemingly unshakable loyalty toward Sam.
But it worked, and Derrick was able to obtain his liquor license again. All the impropriety that Sam had allowed to exist vanished, and the opinions of the residents began to swing in the store's favor.
That is, until they realized just what Derrick and Sam were up to. Sam began to take advantage of the store not being in his name, and proceeded to sell shares of the store to various people (even though legally he is not the owner). He also became more and more abusive toward Derrick, and began trying to have the business shut down in various underhanded ways, such as attempting to persuade people to come in and sell their food stamps, etc. The whole time he was doing this, he was taking money out of the store's bank accounts. When Derrick learned of these things, he had Sam served with a no-contact order, changed the locks, and changed the accounts. They're considering their options, as far as pressing charges goes.
Sam's contract with Derrick is up in October. If it's not satisfied by then, then Sam reclaims ownership of everything in the store (although not the store itself). So, the story is, if I can buy out Derrick's contract, then I own everything in the store, and at that point he'll hand me the corporation.
Like I said. He wants out. He's tired of that store. He's tired of dealing with this shit. He wants to move on with his life.
At the same time, he doesn't want Sam to get that stuff back. He could just surrender it. But he won't.
The store has no outstanding debts, it pulls in a consistent profit, the risk of anything happening is (believe it or not) pretty minimal.
This store is right in the middle of a major downtown thoroughfare. It's low risk, with a very high payout potential. I've got so many ideas on how to improve it, my head is swimming.
But I'm just a guy on the internet.
I know for a fact that if I could get the money to buy out this store, it would be a good thing for me. That is a certainty. It is the safest bet I've ever seen. It's too good to be true, and yet it is true.
I've always wanted my own business. I was hoping for something more like a comic/hobby shop, but this is a good springboard.
edit: you should each consult a separate lawyer.
I recently took a business law course...which does not make me a lawyer of course...but I studied a case that for some reason just came to me: A man owns his own plumbing business, as a sole proprietorship. He calls it "Al Smith's Plumbing" because, hey, his name is Al Smith and he's a plumber. Part of his business strategy is to offer a 20-year guarantee on the water heaters he installs. He is a man of his word...if something happens to a water heater he installed, he'll fix it or replace it free of charge.
Of course, the man eventually dies. He leaves his business, Al Smith's Plumbing, to his son George. George, a plumber himself, keeps the business going as "Al Smith's Plumbing." One day, a water heater that Al (George's father) had installed breaks down. The owner says he's got a guarentee for a free fix-or-replace. George says that's a guarantee from the Al Smith Plumbing that was owned by Al Smith, and this is the Al Smith Plumbing that's owned by George Smith, his son.
The courts rule in favor of George Smith. He's not responsible for his father's guarantees, because even though he runs the Al Smith Plumbing business now, it's in fact an entirely different business because the sole proprietorship changed hands.
My point? Business law is crazy shit under normal one-man-shop-is-inherited-by-his-only-son circumstances. Given the back story that you've provided, all kinds of crazy shit is going to be coming into play. It could honestly be the greatest deal in the world...or you could end up going to jail. You need a business lawyer.
But the gist is right; sounds like you need a lawyer. Sam is selling shares of a business he may- or may not- have any stake in? That's going to come back and bite you right in your ass.
PSN: TheScrublet