My wife and I bought a grocery store which had just closed. We renovated the building added an addition and replaced and added all of the refrigeration equipment. Our plan was to finance the project ourselves. We spent over $250,000 of our own money. Unfortunately we had a glitch with a subcontractor and needed financing for our inventory and working capital. We put together a loan package with the SBA layout as a guideline. We went to many banks in our state, no luck. We went to state government small business programs, no help. We met with the governor of our state, actually got an assurance of funding from the gov., no luck. Now we have hired a company which locates funding for companies like ours. We were told we had a very good package put together. So far we've been denied by two SBA preferred banks. They are still waiting to hear from a third SBA preferred bank. Any ideas? As a foot note: In 1972 I got a loan guarantee with the SBA, paid in the terms of the loan. Worked with SCORE and have had a successful business since 1972.
Unfortunately, this is a common story these days. You have to find a way to secure the debt you want to take. If you own some of the equipment you now have - you could think about a sale / lease back program. Example, you have refrigerator unit that costs $20K. You can sell that equipment to a leasing company for cash (cash in your pocket). Then write a contract to lease it back from them - say at $500 a month. Now, the equipment does not have to change hands or even leave your store - it is just a paper transaction. But, it could put money in your pocket.
Or, if you own the building - is there equity there to be tapped.
These might not be the way you have in mind - but, they might be your only way.
If you are up and running - there are other ways to seek financing - but, until then...
ngoriel | Community Moderator |
4/22/2011 - 7:39 pm
Hi, please contact your nearest SBA local office. We have lender specialists at our local offices that can assist you. Click http://www.sba.gov/content/find-local-sba-office to find your nearest SBA office.
You don't say why the banks are turning you down. That is the first thing you need to really find out. Generally, there are two reasons why they will turn down an experienced entrepreneur:
1. They don't see how the money is going to be repaid, or
2. They don't have the money to lend.
#2 has become more prevalent in the past couple of years.
Go talk with the banker. Ask for the real scoop, no matter how hard it hurts. If you can't find the problem, you can't fix it.
Good luck.
MaryAnn, CEO, BusinessPlanMaster.com
phanio | Contributor | 5/16/2011 - 10:05 pm
ngoriel | Community Moderator | 4/22/2011 - 7:39 pm
BusPlanMaster | Window Shopper | 3/10/2011 - 5:40 pm
Join The Discussion
You must be logged in to join the discussion. If you already have an SBA Community account, Log In to join the discussion.
New users, Register for a new account and join the conversation today!