Falling economy: Small Biz Loan, Good idea or not?
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This section of the forum is for discussing the business and finance issues of the t-shirt industry. Which business structure to use (sole proprietor, LLC, S Corp, etc), how to handle billing, where to register your business and get the proper licensing, etc.
Falling economy: Small Biz Loan, Good idea or not?
Re: Falling economy: Small Biz Loan, Good idea or not?
In this world and in any era of time - there are no absolutes'. If you have a strong idea then nothing can stop you. Look at history when Ferrari was created, they went through WW2 - the same with Porsche and Honda. Now, look at them. If you have the goods - no matter what... you will prevail.
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Re: Falling economy: Small Biz Loan, Good idea or not?
The question I think you need to answer, is can you carry the loan if your business slows down. If you cant afford to make the payment, then it would be a risk to your credit.
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Re: Falling economy: Small Biz Loan, Good idea or not?
There is always the option to go with an SBA (Small Business Administration) Loan if your bank works with them. They will guarantee a portion of the loan for the bank, so that the banks are more willing to loan to start-ups. When you go to your bank, ask if they have any SBA Loan options.
Also, when figuring out how much you need to borrow, you may want to include some interest payments on the loan. For instance, if you know that you need $10,000, it might be a good idea to borrow $12,000 or something, to make sure that you've got the cost of the loan covered until you are making the money to pay it all back.
Re: Falling economy: Small Biz Loan, Good idea or not?
A few points/opinions -
- I believe the SBA charges a additional 3% APR to back a loan. If you take out a loan from a bank or Credit Union at say 10%, you're actually paying 13% APR. Personally, a SBA backed loan is the second to last resort for me (the last being ringing up your credit cards)
- I made a big mistake by thinking I was gonna create a market for something that wasn't what people really wanted. I recommend starting small and finding what your customers actually want and then investing in that direction
- To me, there's no price on actually waking up happy and looking forward to your day (as far as your job goes). For me, this was being self employed and creating t-shirt designs.
- I believe that if you follow your ideas with your heart, the money will follow
- I've read that, even though the US economy is bad right now, that you should still go ahead full steam. Don't cut back too much because you'll be behind when things do actually get better financially
- Actually getting a small business loan right now is harder than it's been in a long time. It would've been easier only 3 weeks ago. Banks are scared, people are pulling their money out of savings and putting it into other things (like their mattresses j/k). Banks don't have as much to work with as they did a few weeks ago and they're tightening their loans. Your personal collateral, credit score, and standing in the bank will decide whether you can even get a loan.
- People aren't buying right now. All this talk about Wall Street, recession, ballouts, and that more people lost their jobs in Sept. 08 than in anytime over the past 5 years has consumers pinching their pennies. On the other hand, we're heading into the Christmas/holiday shopping time - for many retailers, it's the busiest time of the year.
At the end of the day, I'd say this; if you're gonna lose sleep worrying about this loan, don't do it. If it's gonna put stress on your relationships and/or family, don't do it. If you're thinking long term and you can see a financially prosperous future, then do it. Keep in mind that Health Insurance is your problem now too.
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Re: Falling economy: Small Biz Loan, Good idea or not?
The way I have done it is all cash and I would not change a thing. I have been doing signs and now shirts on the side for 3 years while working a full time job. After 3 years word of mouth has spread to were I do not have a week go by with out at least 2 or 3 jobs to do. It takes time and patience but in the long run what you pay for cash does not put stess on you and is YOURS.
Save some money back and get a good used plotter I got my graphtec for $1200 and I would put it up against any of the cheap Chinese plotters any day. But you can go for one of the cheap ones to get started which I have seen some sell for around $500 use that to get things going then as you have the market to support it and the cash buy more equipment.
Re: Falling economy: Small Biz Loan, Good idea or not?
Ist question is: Can your business afford the monthly payments? If you're just beginning, can your personal income support the loan payments until the business can?
2nd question: If your business fails, and you're forced to sell off all your equipment or the business, will that be enough to pay off your loan?
If this answer to either question is NO, then there's your answer to your main question!!
Re: Falling economy: Small Biz Loan, Good idea or not?
A bigger question is, can you even find a lender that will give you a small business loan?
It's been my experience that unless you've been in business for 2 years, and you have profits to show, the lenders don't even want to talk to you.
When I was first starting out, I couldn't get the bank to even talk to me about and equipment lease. I went in armed with a business plan, I already had a relationship with this bank, and I have an excellent credit history. They would not even talk to me about it.
I've yet to find a legitimate lender who will give a start-up loan, and they consider you a start-up for the first 2 years.
Falling economy: Small Biz Loan, Good idea or not? 
