Business Loan in Tucker, Georgia for amount 50,000 — My handle is V. Lee and I have a small business in Tucker GA. My problem is about a $50,000 investment that I need for equipment upgrades for my tree trimming business.
I could pay close to $1200 a month on the loan and I need the terms of the loan agreement to be for 7-8 years for total pay-back.
Lender’s Notes: Mr. Lee wants to get this $50K sooner than later and has an established business with a cash flow already. His business has two employees and he has been “in the black” for three years now. He has equity in his family house and property, and is willing to use that equity to secure the note with the bank. His home equity is approximately $90,000 now so getting approved for this loan shouldn’t be a problem at all, depending on the state of his bank.
With applications like these we always wonder why the applicant’s use the Internet to try and find an online loan, when they have equity for security already, and they don’t mention anything about having a bad credit rating.
As we progressed with this loan app, we discovered that Mr. Lee DOES have a poor credit score and a subsequent FICO of 620. This is somewhat low in the loan officer’s eyes, and no wonder he was looking online for a business loan – he had been declined by his own bank, and he had been declined by another bank that he didn’t have any prior dealings with. The bank he does business with right now is the Bank of North Georgia, and the other bank he applied with was Best Bank – both banks told him that he could get a loan approved, and with a decent APR (low) if he would just get a HELOC (Home Equity Line of Credit). He didn’t want to do this because his wife wouldn’t allow it, as she is on title for the real estate.
As it turned out, Mr. Lee talked it over and convinced Mrs. Lee that they had to do it. So they both went to their bank and applied for a $70,000 HELOC. Below is the calculation of the money they took out of their LOC for business purposes;
- LOC Withdrawn = $50,000
- HELOC APR = 5%
- # of Years To Repay = 8
- Interest-Only Monthly Installment = $208.33
- Principal Payment Per Month = $633
When all the numbers were crunched, the per-month interest-only installment on this $50K LOC would come to $208.33.
$60,767.62 is the total amount to be paid over the duration of the terms they have set – remember that with a HELOC it’s up to you pay it down at your own pace, and all your decision on how much interest you are willing to pay over time.
If you are going to use money from your HELOC (for any reason) be sure you have the monthly cash flow to pay back the money in a timely manner. Don’t put yourself in a bad debt position to yourself either. So many people just burn through their LOC and basically use their house as a piggy bank, when they should be making sure their home equity is not being depleted. [LL Cite] [Time-Stamped: 2011-09-27, 11:14:08]
Disclaimer: The views expressed by this author don't necessarily reflect the opinions of Lazerloan.com, it's owners, or it's affliates.
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