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Old 12-04-2019, 03:23 PM
 
Location: Nashville
3,535 posts, read 4,561,778 times
Reputation: 4587

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I have been in a small family business for many years that has been struggling and dwindling, yet is still hanging on. However, I am going to be leaving the company (or being less associated with it) and trying to look into starting my own software business and I will be spending time studying for potential software jobs as well. I haven't been on the market in 15 years and it will take time for me to be prepared enough to ace algorithm exams and such. However, I never really wanted to work for a big company and always was aspiring to be an entrepreneur and essentially opreated that way for many years in the EHR/practice management type of software business I help build and have been helping run over the years.

Anyhow, I had a question to see if it was possible, somehow, to get a business loan, to start a new software venture. I have no clue how this works, as I am a software developer and have not really tried to finance a new business venture in the past. I am hoping to launch a business that would essentially be me operating as a freelance software developer, but also potentially consuming the dental software business and turning into a cloud based EHR system. As well, I am looking at some other business ventures doing appointment reminder systems (such as Appt Text reminders, Voice Activated Phone Reminders and Mesages, etc) and scheduling systems that can integrate with CRM systems and have some of their own customer management capabilities. If my business venture fails I could always take the skills I have and the software I have developed and market it into a more freelance kind of market or do custom development for a company. There is also a chance in next year I could be hired by a company and just pay off the loan and make a salary that could be higher than whatever business prospects I have.

I know my situation is confusing, but I would just like to know what people think is a feasible way I Could acquire a $15,000 to 30,000 loan or so to launch my business venture that has quite a bit of potential . If I have more potential with fusing it with the existing business that hasbeen around over 25 years that could also be an option.

As far me , I have no debts , very high credit score (over 800, maybe over 850 soon), but I do not have tons of equity or anything. Although, I am not looking to secure a very large loan. I do not have a high salary right now (a reason why I need the loan); but, it is still over $50,000 for the year. So, I don't know what limitations that may have. The family business still grosses over $200,000 a year though. Does anyone have any ideas of the best way with my situation I could secure either a business loan or a personal loan that has a lower interest rate and terms that could extend past 24 months?

I am open to hear people's ideas on what they think is a good route for someone looking to launch a software startup or potentially help save a family business that is struggling. However, I don't want any of this to be on the business owner, rather it would be on me and my investment.

Last edited by RotseCherut; 12-04-2019 at 03:38 PM..
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Old 12-05-2019, 07:06 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
32,432 posts, read 59,122,548 times
Reputation: 35560
Our local credit union offers up to $25,000 unsecured with good credit (over 700) at 9% interest. We used it to pay off a high interest new roof loan, and it took less than 30 minutes in the office to walk away with a check. Of course, that is a personal loan. Having owned a business for 16 years I can tell you that it's extremely difficult to get a business loan to start a business. Lenders want to see a successful track record before lending money, or will require some sort of collateral such as home equity.
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Old 12-05-2019, 12:28 PM
 
Location: In a city within a state where politicians come to get their PHDs in Corruption
1,793 posts, read 1,297,685 times
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New business loans are almost impossible to get. Business loans in general are hard to get and are considered a high risk. Even alternative fintech outfits (Kabbage, Blue Vine, Funding Circle et. al) want at least $100k in revenue, and couple of years in business. And those are at 13%-30% rates with high fees.

If you have great personal credit, try a personal loan like Hemlock said, or open up credit cards that offer 0% interest for 12-18 months. You better pay it off by the end of the promotional period though.

Either way, I wouldn't recommend starting a new business with any kind of debt. If you need debt financing, you're better off purchasing an existing business. Easier to get loans and less risky (presumably) with history of revenue and profits.

Good luck.
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Old 12-05-2019, 03:05 PM
 
Location: Nashville
3,535 posts, read 4,561,778 times
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Appreciate your responses. I actually have no debt and just paid off $6000 debt on a 0% interest credit card that I didn't bother paying since I was making money just leaving the money in my 2% savings account. It looks like my savings account has gone down to 1.7% and I am going to ditch it and get another savings account I see that is offering 2.2%.

It sounds like a personal loan is the way to go, especially if you can walk out in 30 minutes with $25,000, although I would not take aloan out with 9% interest.. I'd just open up as many credit cards as I can. Indeed, I have been transferring balances on credit cards for a while since I had the money in the savings anyway, there was not much point in just paying it off when it is just money down the drain.

I was considering opening up another credit card and already have those 15 month 0% interest on all purchases/transfers, etc, but I don't know if it will be enough money to get me by and opening up lots of cards is risky and if credit card companies see you max out a card they can also close them and it dings your credit badly.

One thing is I can see my quarterly credit report from my Credit Reporting/Identity Monitoring company I use has not registered my payment. My credit went down to 790 on average from all three bureaus over there. However, I just checked my Fico score on one of my credit card websites and it says I am up to 835. I was told that most banks look at the Fico Score versus the other type of credit score (I have no clue about the differences here, but they are different), when determining what type of loan they can offer you. I know that whenever that $6,000 payment registers with my credit card that my credit such jump up significantly. As well, I just paid off my Best Buy card too with which I financed a brand new Samsung Washing machine. However, I am maybe going to be needing the loan sooner than my credit report can be updated and don't know how it will affect my rates.

My goal would be to get a $30,000 to $40,000 loan with around a 6% rate that can be stretched over 3 to 4 years and has no early payment penalty. I would try to pay it off as soon as I get back on my feet and get a new software job or a business launched. I have seen USAA offering these loans, but wonder who else could be offering loans of these rates. Again, I am not sure if they will see my 835 Fico Score or my 790 Experian score.
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Old 12-05-2019, 10:21 PM
 
18,897 posts, read 57,493,443 times
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I would approach this differently. From the outset, before even considering loans, I would be verifying that there was a need and desire for the product I intended to make, and I would line up at least three businesses that would use the software AND assist in development to meet their needs. I could develop great software for reporting how warm seats got in movie theatres, but nobody would buy it.

You have a second issue in your business plan, the legal requirements of any reporting your software does. This is an area where you had better know the ins and outs first.

Niche software can provide a steady income if you know how to play it, but you need a foot in the door first.
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Old 12-06-2019, 02:19 AM
 
Location: Nashville
3,535 posts, read 4,561,778 times
Reputation: 4587
Quote:
Originally Posted by harry chickpea View Post
I would approach this differently. From the outset, before even considering loans, I would be verifying that there was a need and desire for the product I intended to make, and I would line up at least three businesses that would use the software AND assist in development to meet their needs. I could develop great software for reporting how warm seats got in movie theatres, but nobody would buy it.

You have a second issue in your business plan, the legal requirements of any reporting your software does. This is an area where you had better know the ins and outs first.

Niche software can provide a steady income if you know how to play it, but you need a foot in the door first.
Hi Harry.. I have to say if the loan was merely for a business adventure alone, I would definitely think twice before taking out such a large sum of money. However, my situation is confusing and the loan will actually be for a two-fold purpose. I will be trying to launch a side web software business, but also will be training and preparing for software interviews so that if my business ventures fail (and likely they could or be put on hold), I will be able to land a software job that could pay me a good amount of money. I've had recruiters coming at me for jobs that pay over $150,000 a year and I have interviewed for some of these jobs, but would bomb out on algorithm exams and other stuff you need to study for. However, I have to say being partially disabled with a bad back and just hating to work for big company, I am aspiring to be an entrepreneur.

As far as not knowing about the business or industry, well my almost 20 years in the dental software industry and large amounts of research, planning and even amount of legal paperwork I have had to study has given me quite a bit of knowledge of this market and the medical industry in general. In fact, it is the knowledge and hard work I have had that potentially had saved our business from collapsing or bumping into serious legal problems. In the medical industry you have to traverse all the hoops of federal regulation, especially with HIPAA. I do have some background, but, I have not launched my own business on my own and may consider ditching the health care industry all together. However, health care related businesses are definitely stressful and there is lots of headaches. I have become quite accustomed to these over the years though.

As far as the business I do have planned, I do have good amount of knowledge of the market and the regulations. In fact, I have a very well respected consulting group who pretty much gives its seal of certification on many people in the health care industry and use to serve as government auditor for HIPAA compliance for HHS. I would probably have to fork out a couple thousand (not too much considering what is offered ) for this agency to help with the process of getting my servers and software to follow the HIPAA guidelines. As well, as I would have to invest in HIPAA compliant servers that have hardened security and follow the protocol of stuff like Safe Harbor provisions.

There is a lot of potential here, because I have been part of a business that has survived some pretty rigorous competition and still holding on, but weakly.


Of course, if all fails with this venture, I also have considered launching a business that I think has a very nice niche , but my research will always continue. I am looking at stuff like appointment reminder software and integration into EHR systems. I could even potentially take the software outside the medical industry and jump into a whole other market that seems lucrative with appointment management, reminders, appointment confirmation systems. There are quite a few and these businesses look successful.


But, I obviously got to have a roof over my head before I can have a business. I've been dwindling all my savings and will be living off a small income before I finally part ways with the family business after these many years. I would like to try to branch off of the business and help bring the business back to life with the venture I have. But, I may just consider that if I fear things are taking too long for this to be launched, I would start studying my algorithms and prepare for interviews. A little extra cash will make the difference between me working at a restaurant or some low wage crap job and making over $100,000 or more a year, potentially.
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Old 12-06-2019, 08:02 AM
 
5,139 posts, read 3,423,322 times
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Quote:
Originally Posted by RotseCherut View Post
But, I obviously got to have a roof over my head before I can have a business. I've been dwindling all my savings and will be living off a small income before I finally part ways with the family business after these many years.
Trying to understand, do you need the loan to pay for your living expenses and do you already have a place to live? Do you live alone or do you have someone else working in the household to cover bills?
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Old 12-06-2019, 01:47 PM
 
Location: Nashville
3,535 posts, read 4,561,778 times
Reputation: 4587
Quote:
Originally Posted by KaraG View Post
Trying to understand, do you need the loan to pay for your living expenses and do you already have a place to live? Do you live alone or do you have someone else working in the household to cover bills?

I live all alone and have nobody to help out with covering bills. Yes, the loan would be to help with living expenses mostly , as the businesses expenses and investment would be covered by the company I have been working for, as the features I would be developing would make my previous business (The EHR/Practice Management software) more profitable.

I basically would mostly be spending next year studying for software interviews, while on the side trying to launch this business, which, funny enough, will help build my portfolio as a web developer. I am trying to shift from years of being a desktop developer to a full stack web developer.
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Old 12-07-2019, 01:32 PM
 
Location: East Northport
3,332 posts, read 8,691,971 times
Reputation: 1291
Business funding is incredibly difficult to find for start ups. You may be best to look at personal lines of credit. You sound like you would qualify. I sent you a DM with some info that you may want to look at.
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Old 12-17-2019, 06:57 PM
 
251 posts, read 58,763 times
Reputation: 167
many use their credit cards.
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