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Old 08-04-2014, 07:06 PM
 
Location: Metro Detroit, Michigan
17,343 posts, read 16,055,420 times
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I'm in the process of starting my own small business. It's basically going to be a small shop where I will be doing a mix of job shop work, and manufacturing my own products. I have set aside about 40K for my initial expenses, so a small business loan is not essential. I would like to have the option to take out a loan should I happen to need it though.

This is my first time dealing with loans. Any advice how to pursue this, or is it something that i not worth the aggravation if I can avoid it? Should I plan to put together some sort of portfolio of what it is I am doing?

This is my first roll of the dice when it comes to a business on this scale, so I do have some jitters about the whole process. Any help or advice would be much appreciated.
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Old 08-04-2014, 07:49 PM
 
Location: East of Seattle since 1992, originally from SF Bay Area
33,134 posts, read 60,168,031 times
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What the bank will require is a business plan, and information about your qualifications to run that kind of business. As I found out when I started my business in 1993, you need enough money to pay for the equipment, materials and supplies, payroll, utilities, rent, taxes and licenses, business insurance, advertising, and other business expenses for at least 6 months. In addition, you need enough to live on during that 6 months while building the business to a profitable level. In my case that was closer to $80,000 but I was in a high rent area in a strip mall. Better not to borrow if you don't have to, that adds to the monthly expense. Business loans should be used for expansion, new equipment or a larger space as you grow and have the money to make the payments out of the profits. In my case the first "loan" was after
9 years when I bought a new piece of equipment for $16,000 to expand my services and the additional work paid for it in the next year.
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