Start-Up Business Loan in Georgia amount $30,000 — I’m down in Macon County, GA and I have an ingenious idea for a business plan.
I think that I could sell little blobs of BP’s oil that floated up on the shore on my brother’s home town beach down south. My name is Louise Y. and I’m at the moment in Macon, but moving down to the coast soon.
I want to borrow $30,000 so I can take these blobs of oil and package them in a very small, clear, plastic ball, as reminder and keepsake of the horrible spill. I would like an APR lower than 7% on the loan, and I need to know whether or not you will approve me by Friday.
Lender Notes: There was a time (seems like yesterday to me, but actually decades ago) local banks or credit unions would give private sector business start-ups financing if they simply had a great business plan, resources, and good credit. Don’t get me wrong though, this still happens in high finance with bank customers that have allot of cash flow, assets, and a perfect credit score. You don’t think the Koch Brothers would ever have difficulty getting a loan from a bank do you? But for the average, everyday, small business owner, getting approved for a fast loan for dozens of thousands of dollars is almost non-existent unless you have some equity or security firmly placed on the note.
This customer wanted the loan with three days, and with a rate lower than 7%, and unsecured. Not going to happen. No way in hell. Conventional lenders will not agree to such a note. Only private lenders would consider such a loan, and they usually want a piece of the action – they want to get a percentage of the company for their money.
Some private lenders may lend small business start-up money for interest only, but their rates can run fairly high as well. I know of a friend who just got a loan for his business and he borrowed $1,000,000, and he has to pay $20,000 a month in interest. I won’t even get into the effective APR on that, and I won’t get into the fact that his business model isn’t providing a positive cash flow yet – running at a loss every month still. Anyway, that is another story for another time, and another post.
In this case what happened was a little different than expected. Our staff encouraged him to find a different way to get the loan for a lower rate. His common-law wife has excellent credit (FICO over 720), and she owns a $760,000 house outright – clear title. We suggested that she get a personal line of credit on her property (HELOC) and use the LOC for accessing the start-up capital required for his idea. As a sort of side note, there are people doing exactly as his business model already. They’re packaging chucks of oil from the BP oil spill they find on the beach, and making a sort of disgusting souvenir for sale. (no offense folks)
Below is the loan approval data on a $30,000 HELOC withdraw in Macon, GA with Suntrust Bank – HELOC limit $50,000. She could have got a higher LOC than that, but they really didn’t need it. This is based on an interest-only cost.
- HELOC Balance = $30,000
- HELOC APR = 4%
- Time Before Paid Back = 3 Years
- Interest-only HELOC payment per month = $100
- Principal and interest HELOC payment = $885.72
As per LL calculations, the monthly interest-only payment on a $30,000.00 line of credit balance would end up being $100.00. Near the end of the “draw period”, the principal and interest installment payments per month would be $885.72 for 3 years ($31,885.90).
If you can somehow use a personal HELOC (Home Equity Line of Credit) to finance your small business, please do so. You will get the lowest rate possible, and avoid using private funding from others – no strings attached. [LL Cite] [Time-Stamped: 2011-09-26, 10:02:12]
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