Since we are just starting out in the business, I was curious if anyone has ever tried for a small business loan to help get started.
We have been doing portraits and wedding work on the side for the past couple of years, have acquired our business license and are putting together our long term goals and objectives. We also have a small studio space available, so really all we are looking to do is upgrade/acquire gear (which I am thinking could be used as collateral for the loan).
Has anyone went this route before? Thanks for any tips or thoughts.
When we tried this, several years ago, the bank pushed us into a HELOC, because it was easier for them. Without at least 2 years of experience (P&Ls, tax filings, etc), they didn't see a business loan as doable. The were adamant about not using equipment as collateral, they don't want it.
But in today's financial climate, you might find a different tune from the banks...
You must have a air-tight business plan that accounts for everything in a very realistic manner. They shredded our initial assumptions about sales growth ;-(
cwebster wrote:
When we tried this, several years ago, the bank pushed us into a HELOC, because it was easier for them. Without at least 2 years of experience (P&Ls, tax filings, etc), they didn't see a business loan as doable. The were adamant about not using equipment as collateral, they don't want it.
But in today's financial climate, you might find a different tune from the banks...
You must have a air-tight business plan that accounts for everything in a very realistic manner. They shredded our initial assumptions about sales growth ;-(
<Chas>
Thanks. I am not counting on this happening, but would be nice if I could get it pushed through. Someone else had mentioned "line of credit" to me, so if I didn't spend the money, the bank wasn't really loaning it to me.
I'll look into it more. Researching business plans as we speak. Thanks so much for the info.
I think you'll find it essentially impossible to get a loan under your business, and that the bank will want to give you a personal loan instead. I would short circuit your work and go to the bank and ask them if it's even possible (with tons of supporting wonderful documentation) for you to get a business loan. You may save a bunch of prep work...
Banks aren't going to loan you $10k or $20k for equipment, it's not worth the paperwork for them. It needs to be a lot more, like they say if you owe the bank $10,000 that's your problem, if you owe the bank $250,000 that's the banks problem. If you need $20k thats what rich uncles are for!
Unlike restaurant equipment a bunch of used camera stuff is not very good collateral, I'm afraid it's up to you getting a personal loan....
A business plan for a small photography business is a good exercise and gives you a roadmap as to what your goals and expectations are but it's not the same as a plan for a more structured operation. Photography is a fickle master to say the least.
If you've been doing portrait and wedding work "on the side" for the past couple of years, why don't you have the funds you need to upgrade/acquire gear? Put another way, what's going to be different about your business plan than the way you've been conducting business for the past couple of years that will make it possible for you to earn a profit? It would be one thing to say that you're just getting started and you have a plan for earning enough to pay back your loan and earn a profit going forward, but this still raises the question about what you've been doing until now. I'm not trying to bust your balls and it may just be that you've left out important details that would render my questions irrelevant. But as you've laid this out, I think these questions are worth considering.
A word of advise I am by profession in the banking and financial business. Currently institutions are not lending money directly for SB startups or even established SB's. It most likely will be a few years until we see these types of loan or credit lines. Do not however be discouraged check with your local SBA (small business administration), they can assist you with funding whcih often comes from the banks that will not approve you or lend directly to you. Grants are also an option and the SBA can assist you with those as well.
Russ: Valid questions. Without going into specifics, let's just say I spent a lot of time helping people who might not have otherwise had memories captured. The "pay" might not have been great, but I enjoyed the work. (also, bad economic times hit us as well)
Doogie: Thanks for the info. I was actually looking at the SBA site today about just this kind of thing. Also, it seems that there may be a couple of other options that we are looking into.
Bottom line, if we have to save up and do what we need to do a piece at a time with what we are making from shooting, that is what we will do. I am just not the most patient person in the world.
