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Old 01-08-2009, 02:40 AM
 
Location: Los Angeles
9 posts, read 25,397 times
Reputation: 12

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So my business partner and I have discovered a new venture, for which we will need a start-up loan of around 20-30k. I've googled the loan rates and calculators but have found nothing concrete.

Can anyone tell me the interest rate on a $20,000 business loan for 1,3, and 5 years?


Thank You.
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Old 01-08-2009, 08:48 AM
 
28,461 posts, read 76,016,848 times
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Good Luck! Start-ups are basically impossible to borrow for. Did you ever wonder why there so many immigrants that have convenience stores and little franchisees? They pledge their families dowries to start these businesses! Cash or other near liquid assets.

If you have a going concern you can probably get a loan, but the rates will sicken you. If you got the business off the ground with a HELOC or even CC you are going to run into cash flow issues pretty quickly and those are with low intrest rates.

Even "venture capital" firm or "angel investors" are pretty darn tight fisted with opening the vault these days. It is extremely rare to have they simply fund your "great idea".

Heck even the "SBA" generally likes to see THREE YEARS of ongoing business activity before they'll loan out money: Small Business Administration - Most Requested Items (http://www.sba.gov/mostrequesteditems/CON_FAQ1.html - broken link)
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Old 01-10-2009, 12:59 PM
 
Location: Los Angeles
9 posts, read 25,397 times
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But the most of the requirements are for existing businesses, I am looking to obtain a start up loan.


And let's say I am able to obtain the loan, ridiculous interest rate and all, do you know what kind, if any, penalty fee I'd be stuck with if I was able and willing to pay it off before it was due? I understand it's situational and stated in the contractual agreement, but I'm just looking for estimates.

Thank you for your input!
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Old 01-10-2009, 05:01 PM
 
28,461 posts, read 76,016,848 times
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Business lending is still a much more "hit or miss" kind of thing. It not just that you will get offers of ridiculous interest rates, you won't get ANY reputable lenders to do loans for people "with an idea" in many many areas. That why there are stories of folks who borrow with their CC, HELOC, or against a 401K to start a busines and MOST OF THEM LOSE badly. If you can pool some money from friends / relatives in small amounts to get the business from "idea" to actually having cash flow, and they won't want anything paid back for 3-5 years then you are in MUCH better shape as far as getting some kind of lender.

Once you have a "business lending relationship" the rates might not be too bad, and the terms generally have NO penalties for early payback -- this is not the same as mortgages and stuff AT ALL. In fact they whole "secondary market" for mortgages is something that could some day enable much better business lending, but becuase "business risk" is so much harder to quantify there is nothing really like that today...
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Old 01-10-2009, 05:08 PM
 
48,508 posts, read 88,413,122 times
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If you don't have that much ;you need to sell your idea to investors.Unsecured loan to ideas are too high a risk.
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Old 01-10-2009, 07:11 PM
 
11,364 posts, read 46,953,267 times
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Unless you have something more than a business "idea", ie, tangible assets that can secure a loan, a business plan, and an in-place business that needs capital to expand operations ... you have nothing to secure your loan, and nothing to show an investor value for the investment or much of a suggestion that you'll be able to generate a return on the investment.

At such a nominal amount of money needed ... $20-30K is in the realm of CC debt ability ... I don't know any investor who'd loan against your "idea" with an unsecured loan.

The only way I know of getting this amount of money on a business "idea" would be to get personal loans from family and friends. Generally, I tell family members to loan no money that they cannot afford to lose, and I tell "friends" that they won't be after long when the money changes hands. Especially if all you're intending to pay back for your "idea" launch is an amount of interest ... most lenders would want a substantial portion of your business in addition to a return on investment.

What I'm not hearing about your wonderful business idea is that you're willing to put anything into the business except your "idea". That's not enough to convince anybody that you're sincere, motivated, capable, knowledgeable, or that your business idea will actually work. With an "unsecured" loan, you can literally walk away from the whole thing and the lender has little recourse or hope of recovering their principal, let alone interest owed on the loan.
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Old 01-30-2009, 05:57 PM
 
1 posts, read 4,174 times
Reputation: 10
Default loan structure

nThe problem you have is you don’t know how to structure your loan into something you can sell your investors. You need to give the investor security so they feel comfortable placing their funds into your company. If you solve this problem you will be able to use their 401k as a business loan. Remember most of your family and friends just lost 20-40% in their 401k. So they are looking for a way to end their bleeding.
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Old 01-30-2009, 10:06 PM
 
Location: Houston, Texas
10,420 posts, read 46,390,879 times
Reputation: 10458
Quote:
Originally Posted by tm investors View Post
nThe problem you have is you don’t know how to structure your loan into something you can sell your investors. You need to give the investor security so they feel comfortable placing their funds into your company. If you solve this problem you will be able to use their 401k as a business loan. Remember most of your family and friends just lost 20-40% in their 401k. So they are looking for a way to end their bleeding.
Wow that was an embarrassing post. Your behind in the times. Your theory worked a couple/few years ago. No none nadda zero uncollateralized loans are given today, none, not even to a person with an 850 score.
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Old 01-31-2009, 06:43 PM
 
Location: SE Florida
9,362 posts, read 23,523,644 times
Reputation: 9391
What about bailout money now being discussed being targetted at making funds available for new business loans?
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Old 01-31-2009, 08:30 PM
 
Location: Houston, Texas
10,420 posts, read 46,390,879 times
Reputation: 10458
Quote:
Originally Posted by HIF View Post
What about bailout money now being discussed being targetted at making funds available for new business loans?
The crooked corrupt banks will just steal that too. Many banks already got that bail out money and it was meant to help them loosen up credit and start giving loans again. Instead they used the money to buy up smaller banks and give their CEOs big fat raises.

That just about tells the story of corporate America doesn't it. Dispicable !
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