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  1. #1
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    Aug 2002
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    How do you get a business loan

    If I have an LLC, and want to take out a business loan, and have it not affect me personally and only in the name of the business, who would I go to? Someone told me that the business is it's own identity and they should use any of my info when getting a loan for the company. Is this accurate for a two-owner LLC?

  2. #2
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    BEST ADVISE == Avoid the loan if you can and try to stay out of debt..
    Someone told me that the business is it's own identity and they should use any of my info when getting a loan for the company
    It is true that it's supposed to be able to be accomplished, but finding a way to do it, if you are smaller and/or have never gotten a loan under your business name before, will prove to be difficult, if not impossible.

    "Anyone" can open a business of "any type" with or without credit -- good or bad. It wouldn't be wise for banks to start passing out loans to businesses that are not yet established credit wise.

    If this is the first loan for the business, I would advise simply going to the bank your business uses and asking them for a Business Loan (providing your personal info as they'll request) and getting the loan that way....
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  3. #3
    Join Date
    Aug 2002
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    Singapore
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    Hi,

    If you don't have that amount then start from small as a reseller and slowly you will grow bigger as most of the hosting provider start as a reseller and when they have the enough capital then their started that small hosting company .
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  4. #4
    I would avoid a loan at all costs. If you can get a family member to loan you the money then that would be better. :-)

  5. #5
    start small and grow....

    get a reseller account, resell. get more clients, go dedicated.

  6. #6
    Join Date
    Aug 2000
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    NYC
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    Re: How do you get a business loan

    Originally posted by Taoron
    Someone told me that the business is it's own identity and they should use any of my info when getting a loan for the company. Is this accurate for a two-owner LLC?
    Yes, a corporation or LLC is a separate legal entity and can legally take on obligations -- like getting a loan -- independent of its owners, no matter how many owners there are.

    But that doesn't mean a bank has to lend anything. Your new company has no credit history, so is no more a good risk than any individual with no credit history, no work history, and no references would be. In fact, it's a worse risk because the risks of taking a new company into bankruptcy are pretty low.

    So in practice the chances of getting a business loan without taking personal responsibility for it -- that is, you and your partner have to sign as parties to the loan -- are pretty low unless you have some kind of impressive track record and/or a can't-miss business plan (and starting yet another a small hosting company is surely not that).

    As for how to get one, just like any other loan: go to your bank and ask for an application for a small business loan. You can also talk to the SBA (assuming you're in the US; other countries probably have other agencies similar to our Small Business Administration) which might suggest avenues or programs.
    Last edited by JayC; 09-02-2002 at 03:46 PM.
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  7. #7
    Join Date
    Aug 2002
    Location
    Chicago
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    AMEX and Discover provide small business loans with very easy terms....... just remember, if you fu<ked up, they will be owning your business....

    If you are a citizen of US, the gov provieds you very good loans with very good terms, you should look into that.

  8. #8
    Taking loan is easier, but to repay it becomes very difficult. Be confident that you will do good business and then only think over it.

  9. #9
    Join Date
    Aug 2002
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    Downers Grove, IL
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    this is something that can work for you as an individual, and may (i'm not sure about this though) work for a small business.

    basically, take out a "secured" loan. secured loans are a lot easier to get then an un-secured loan. if you have around $1,000 - $5,000 to work with, put it in a savings account. (perhaps a Certificate of Deposit might also be useable so you can get the higher interest rates). when you take the loan, use the money you have in your savings account (CD?) as colatoral (did i spell that right?). to the bank, all they're seeing is you gave them the full amount for the loan, so even if you default on the loan, they still have the money so there's no real risk for them. now, when you pay this back, make sure you put the money you took out into a separate savings account (a CD won't work here).

    use that money for paying back the loan (and nothing else!). best bet would be to take out the loan for about a year or so, and pay it off early. when you've payed it off, the bank will see that you've had some credit history and you paid off early. this will look good for you when it's time to take out an un-secured loan.

    now, once this is done, and you are able to get an un-secured loan, make sure you can pay it off. one good and one bad mark on your credit history might just put you right back where you started, except you'll have a spotted credit history instead of no history (you can easily fix a "no history" situation. a bad credit history will stay with you for up to 7 years).

  10. #10
    And you can try bplans.com and adapt the number to your company, but I think you better start small....
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  11. #11
    Join Date
    Dec 2001
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    I would like to mention briefly that just because you are incoroporated and you take out a loan, this does not mean you cant be held liable for the debt of the company.

    Many people think this is true and in some cases it is, but ive known situations where people received incorporation, taken out loans, failed to pay back the loan, and are now being billed and threatened on there personal assests. When it comes to things of this nature there are way too many laws to take the risk involved. Please before you take out any kind of loan for your business make sure you contact a lawyer or a person at a local small business development center in your area to go over all the do's/donts and what the LAWS really say.

    Alot of people "know" the facts, but not the laws.. . Just be careful. Not saying you dont intend on paying back, but please dont assume that because you are incorporated that if you dont pay back that your home free, because your not.

    Just my 2cents, and if you only need a little bit of money and you MUST have it up front, right now...
    Call visa and discover card,, two credit cards failed payment is much better than a default loan on your credit report AND they cant take your house for not paying your visa card payment.
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  12. #12
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    Aug 2002
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    St. Louis
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    I've decided to just work with what I have. I don't have much. It'll be small for awhile. It'll probably take awhile to break even.

  13. #13

  14. #14
    Join Date
    Jun 2000
    Location
    Orlando FL USA
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    I've decided to just work with what I have.
    Excellent decision. Those who think smarter are wiser and as such have a better chance of 'breaking even' sooner than you may think
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  15. #15
    Originally posted by Taoron
    I've decided to just work with what I have. I don't have much. It'll be small for awhile. It'll probably take awhile to break even.
    Thats the wise decision..
    get reseller account.... >>get some clients and then go for dedicated machine........
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  16. #16
    Join Date
    Mar 2001
    Location
    Michigan
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    The SBA wants a min of a $100,000 loan.

    There are other websites that has referrals for business loans -- if you're still interested in that (stay far far away).

    Check out this site:
    http://ncb.smartonline.com

    Best bet.. Find a relative with money to spare... and do a contract where you'll repay them the initial loan, plus so much interest.

    Loans can be trouble -- not a good thing to do when you're first starting out, and don't have much income coming into cover everything.

    Start out small, and work up, its a LOT easier to do it that way.

    I wish you luck!

  17. #17
    Join Date
    Dec 2001
    Posts
    1,194
    Unsecured Credit Card or Unsecured Personal Loan.....

    If you see the word secured or collateral in the documents anywhere throw it away.

    2 reasons, you dont want to loose your house over a gone bad reseller attempt.

    And if your credit isnt good enough to get an unsecured loan, then you normally dont need one.

    Also if you have an unsecured loan and you miss a payment or two, or things go bad they will work with you... why, because they have no other option. Secure loan chances are your going to loose something and get screwed and ruin your credit(which means you cant correct whatever problems the loan closing will cause because you need credit to get back on your feet right, well guess what, you just ruined it?)
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  18. #18
    Join Date
    Dec 2001
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    Oh and one other thing about getting a loan.

    Before you go to apply take a credit card and take all the money off of it....
    Place it into a savings account, use the money in the savings account as collateral on the loan.

    1.)The credit charge hasnt appeared on credit check yet so wont hurt your score towards the loan, BUT the cash in the savings account will provide collateral enough to get loan.

    2.)After things go through take the money out of the savings account and immediately send that amount to your credit card company as a payment, since youve payed the balance within 30 days you have taken no intrest onto the card...

    3.)You can use more than one card if neccessary, but be sure to close the loan fast as you put the cards in account and be sure to pay back before end of 30 days....

    But honestly, i would avoid the loan at all costs...
    Get a colocated managed server or dedicated server with an excellent company and resale off of it,, probably managed would be best or semi managed...

    Then from there take all your profits and invest into expansion for a few months.. before you know it you can start to take only half your profits into expansion, then a third,,, you will reach your goal with no risks and will probably learn more in the process...
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  19. #19
    Join Date
    Aug 2002
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    Seattle
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    Most lenders want to see 2+ years established as a corporation, positive financials ($20,000+ net profit previous two years), and 680 BEACON score (goto http://www.equifax.com and pony up $12.95 to get your BEACON score ;p) on a personal guarantee with at least seven credit references before they'll even start talking to you. I've never seen American Express give credit to someone with other than exceptional credit. Sears is more lenient (you can get a $6000 - 10,000 Gold card with 16.24% APR more easily than other banks, but they dont do leases or installment loans). CapitalOne is an excellent bank to obtain a business card from. They will start you out small but move you up if you maintain a perfect payment history

  20. #20
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    jdp29053:

    With all due respect: That makes little sense, it does not work, and its the kind of activity that gets your account restricted. You can only get so much cash off a credit card and its not going to be enough to secure any type of loan. Your credit record benefits from open tradelines with low balances, not unreported tradelines with high balances

    I may want to mention that I work swing shift for a large bank in Financial Solutions/Collections and this is the kinda stuff we deal with all too frequently

    Anyone that wants to "talk credit," feel free to e-mail or AIM me and I would be happy to give you my two cents.
    Last edited by ddosguru; 09-10-2002 at 07:51 PM.

  21. #21
    Join Date
    Sep 2002
    Location
    Lakewood, NJ
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    I myself have been mulling the idea of going after a loan, but in the interim just keep plugging along, I have developed a hell of a business plan, and have decided to seek some private investors instead. We are currently trying to break into the Dial Up ISP market, using a VISP. So far this has been a major dud, but our hosting accounts keep picking up. So at some point we should be able to on our own fund the VISP to get that really rolling. With the ISP, what we are really looking to do is begin providing WISP services broadband in nature to compete with the local cable and phone companies, that is where we need $$$ and why we have been looking towards a loan.

    Honestly if you can avoid it do so, just keep growing slowly and you will be ok.
    David White
    Internet Business Planning, Dial Up ISP, Web Hosting & Design
    http://www.Best-XXX-Hosting.com

  22. #22
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    Aug 2002
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    Seattle
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    Isn't there already a "Lightning Internet Services" at lightning.net?

  23. #23
    Join Date
    Sep 2002
    Location
    Lakewood, NJ
    Posts
    18
    Not that I know of, I registered the business name here in my state, no one here is using that name. And no one was using the website.
    David White
    Internet Business Planning, Dial Up ISP, Web Hosting & Design
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  24. #24
    Join Date
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    I'm really not trying to be a butthead, but:

    Domain Name: LIGHTNING.NET

    Created on..............: Mon, Jun 12, 1995
    Expires on..............: Fri, Jun 11, 2004
    Record last updated on..: Thu, May 30, 2002

    Administrative Contact:
    Lightning Internet Services, LLC
    Lightning Hostmaster
    327 Sagamore Ave
    Mineola, NY 11501
    US
    Phone: 516-248-8400
    Fax..: 516-248-8897
    Email: [email protected]


  25. #25
    Join Date
    Dec 2001
    Posts
    1,194
    Why is using the credit card money bad.. hell.. thats what its there for, get mad all you want, but lets face it... your paying anywhere from 10-23% intrest on a credit card,, do what you want with it...

    I have 4 credit cards right now totalling up to about 11k in worth....
    I could have used them for cash advances and later payed back and it would have been the equivalent of taking out a loan except its not secured.. and theres nothing wrong with that..

    Oh, should i go put up my house just to say i did? NO, if there is an unsecured method thats the way to go.. and you working at a bank would be lying to tell me that you think any different.
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