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Originally posted by bodypainter
We are okay financially - I think we scored around 800 last year when we refinanced our house and again a few months ago when we bought the car. I make good money, more than enough for us to live on. As for the down payment, I figured we'd probably take a 2nd on the house. As for money left over each month, I max my 401(k) and we probably throw $500 a month in savings. Of course about once a year we buy something that depletes that so it's not like we have huge buckets of money in the bank. If we really tried I think we could save $1000 a month.
This convenience store we're looking at has a $149,000 asking price. The agent says it nets about $65,000/year for the current owner. I am hoping that means bottom line profit after everything but of course I haven't seen their books or tax returns yet. Anyway, 20% would be $30K and I believe we could swing that for a good bet.
As for this being 'her baby' I mean I want it to be her store. I will do whatever needed financially but this is to be her job, her business, her baby. I'll keep my job. I like that concept because she wants to contribute to the household and if she could really pull in $65K a year after taxes and all that effectively doubles our income (as opposed to her working for someone else for peanuts). That would greatly help with my true goal of not having to work for wages until the day I die.
I also thought there might be some loan guarantees available to her as a female owned business. I've crawled the SBA website but there's an overwhelming amount of stuff there. I guess I need to spend a chunk of this weekend and make a business plan. Sounds like I'll need a convincing one to take to the bank. Also, I'm a veteran so I should probably check the VA to see if they can help.
Thanks for the advice and feel free to throw out any pearls of wisdom you care to share.
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Well, it sounds like you are in a pretty decent position to start this then. An 800 credit score, by the way, isn't okay, it is excellent. Be sure, however, that you are able to support this business without the income from it, as there certainly may be tough times ahead. I would imagine that it would be relatively safe to say that it pays for it's own operating expenses, but make sure that the loan payment would be manageable with just your income.
The only help I can offer with actually getting the loan, is to make sure that you have everything in order. If you are denied due to "policy violations, Loan to Value Ratios, ect" from a larger institution, try a smaller one. Smaller institutions generally don't have a large amount of commercial loans, so they are more likely to look at them on a case-by-case basis, instead of using blanket policies to govern their decision.
Another helpful hint on getting the loan: Sheer quantites of information can intimidate smaller institutions into giving in, in some cases. Come up with as much information as you can, regarding the books, statistics of the area, development, ect that support the business. A vast quantity of information will show that you have the dedication to make it work, as well as the information itself will help you argue your side.
Pearl of Wisdom- Do not let emotions into this at all. Having your wife run a business and all might be a goal, but make sure that you examine this business thoughoughly and logically. If there is a descrepency in the books, take what the owner says with a 10 pound bag of salt, remember, (s)he is trying to sell you this business. Come to your own logical conclusion, and although this may seem like the "perfect" business, don't become emotionally attached. More opportunities will present themselves, and it is better to wait for the right one that jump into something that will turn into a nightmare.
Also, it is not uncommon for small commercial loans to go sour rather late in the game. This varies from institution to institution, of course, but there will by times that a piece of information will arise that will bring the loan process to a screeching halt. If you do stumble upon some additional info, make sure to let the bank know. It very well may destroy the chances of the loan, but they have statistics from thousands of others just like you (via credit bureaus) and if it didn't turn out of a large percentage of them, it very well may come and bite you in your nether region as well.
Other than that, good luck, and let us know how it goes.
If you have any more questions, post 'em
