jb5580 Posted November 23, 2009 Share Posted November 23, 2009 I wanted to discuss with you all who have been at this a while about the topic of financing from banks. Have any of you gone to your banks to obtain business lines of credit or loans, and if so how receptive were they to the vending industry? I am in the process of methodically building a route in my city and would also like to purchase some established routes that come my way. I have the personnal finances and credit to accomplish my short term goals but would prefer to obtain a credit line under my LLC that could be working capital that I could keep reinvesting as I grow my business instead of mixing personal funds. How did you go about approaching your banks, did you bring a business plan, or was it simpiler than that? Are they willing to lend money? I hope this starts a good response for us newbies, I would also like to move into some full line routes I've seen pop up in my area, but need funding. Thanks Link to comment Share on other sites More sharing options...
jb5580 Posted November 23, 2009 Author Share Posted November 23, 2009 How did you do that with your LLC Kelly, did you just get the loan via personal accounts and then deposit it into your business account, or did you just buy what you needed with the personal funds and from then on it will be business related? Did they just flat out deny you funds under your business because it was a young business? What about a business credit card, were you able to get one of them? Link to comment Share on other sites More sharing options...
mxer518 Posted November 23, 2009 Share Posted November 23, 2009 I have touched on this in the past here on the boards and it really pertains to more the full line machines and the equity holding equipment but Leasing company's are a wonderful way to get your business off the ground, its not the traditional lease you all are thinking of...The best part to a lease is it keeps your cash flow in tact and does not tie up your assets in any way. Link to comment Share on other sites More sharing options...
Paraflier Posted November 23, 2009 Share Posted November 23, 2009 its not the traditional lease you all are thinking of... full line machines and the equity holding equipment but The best part to a lease is it keeps your cash flow in tact and does not tie up your assets in any way. Intriguing.... Tell me more of this lease that's not like a lease.... Link to comment Share on other sites More sharing options...
BluePlate Posted November 23, 2009 Share Posted November 23, 2009 One of the best ways to grow is using other people's money (OPM). With that said, it is very easy to over leverage yourself. I think in many terms the standard banker just does not understand the vending business, let alone the bulk vending business. It is not uncommon to return your investment within 6-7 months on equipment you buy. Although sometimes, there can be a series of events that you need to throw money at, and it does not get better. I recently spent $3000 on some skill crane games. I bought them used. One nightmare after another. Shipping issues, repair issues, cosmetic issues, rent issues, insurance issues. I recently put everything together and looking back, it would have been the almost the same amount to buy a new machine. OK, getting back on subject. I would suggest a few things. Do you have a rich uncle or a friend? Use Virgin Money. This gives you all the tool to borrow from friends and relatives. When buying a route, ask the seller if they are willing to finance the route. You sometimes need to put incentives in. I bought a route lest year the asking price was $5000. I really think the route was worth $4000-$4200. I gave the owner asking price, but paid over the course of a year. DO YOUR HOMEWORK on the route! Next, your can use a peer to peer lending like www.prosper.com .... Spill your guts out and you can get funded quickly. OR, you can use www.accionusa.org this place provides microloans. They will require a business plan (but they will help you). They will look at the whole person (like your electric bill history). Great program. Do you have a few dollar stacked away, but don't want to touch it? Try the old passbook loan. You basically use a savings account as collaterial. Lastly, you can go for a 7(a) small business loan. Every state has a SBA office. They will help you choose a bank and point you in the direction for help like a local community development commision (CDC). Link to comment Share on other sites More sharing options...
jb5580 Posted November 23, 2009 Author Share Posted November 23, 2009 Haven';t heard of a passbook loan, were do you get them, banks?. Can you use an IRA as collateral? I have a Roth IRA that is seperate from my other retirement and pension plans at work, would'nt mind using it as collateral. Link to comment Share on other sites More sharing options...
BluePlate Posted November 23, 2009 Share Posted November 23, 2009 Ask your bank, passbook loans are not really advertised and really does not make the bank that much money. Some will argue they just don't make sense.Why would you want to take a loan against your own money? For my first car, my Dad put $2000 in a savings account with my name on it and I took a passbook loan. The loan showed me the value of a loan, and the importance of paying a loan on time. Most banks won't let you take a loan using a Roth as collaterial. Basically the fines and fees would be too much if you diffaulted on the loan. Many employer 401(K) plans have a borrowing option. Although I would be very careful with this. Although if your 401k is returning 6% and you could return 20% if you have a sure business plan, could be worth it. Link to comment Share on other sites More sharing options...
dperry Posted November 23, 2009 Share Posted November 23, 2009 I have gotten 2 personal loans from Prosper.com to be used for my vending business. No bank involvement. Link to comment Share on other sites More sharing options...
mxer518 Posted November 24, 2009 Share Posted November 24, 2009 Intriguing.... Tell me more of this lease that's not like a lease.... there are a lot of company's that do leasing with dollar buyouts at the end, so basically its a loan but does not require a down payment and does not put up any assets as collateral. This is how all of the major operation's out there are getting money for equipment and big ticket locations. I have several open leases out at the moment and it is by far the best way for getting vending financing because these company's are working with vendors all over the country on a daily basis and understand the industry. Link to comment Share on other sites More sharing options...
wevend Posted November 24, 2009 Share Posted November 24, 2009 My Line of Credit is reviewed yearly. The last time they have been asking for more information like serial #'s of equipment and things of this nature. I asked the banker why and he said Federal Regulations have tightened up and they require they more paper work on loans when the bank is audited. Never missed a payment or anything like that either. Have been in my main business since 1971 and started bulk vending 2 years ago as a hobby. I don't think the banker knows about my hobby. Link to comment Share on other sites More sharing options...
motownman_715 Posted November 24, 2009 Share Posted November 24, 2009 Great inforn thank you Link to comment Share on other sites More sharing options...
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