MaggieMae
Reality bits
- Apr 3, 2009
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Who owns the cars if he can't pay the credit union or the seller?
Whereas I was talking about lines of credit for operating capital. Business Loan, Unsecured Lines Of Credit, Small Business Loans
Do you understand the difference?
Yes, I do, and that's the kind of line of credit I'm talking about, too. My BIL and his sons came up with cash and personal loans to buy a few cars at auction; then they went to the credit union with a business plan. (I did forget to mention that they had help from the SBA, which I don't think enough small businesses take advantage of.) They did have to put up some cash at the outset which they drew against, and in less than a year, they were able to get the bank loan they needed in the form of a letter of credit for operating expenses. I don't know how much clearer I can get. I don't know what his financial arrangements are today as a result of changing over to trucks and snowplows, but I do know that he sold the remaining used car inventory almost at cost and the bank didn't lose a thing. I know because I got first pick--a 2002 Chevy Prism, which is the best car I've ever owned, bar none, by the way.
There is no letter of credit for operating capital, that's a line of credit. Also, you have demonstrated only that the was able to get a loan after he was already up and running which is completely different than my point about access to capital for new businesses or new divisions. These areas are the purview of private investors, which now have to operate according to the rules banks and credit unions use.
I think it's a no-brainer that a brand new business would have difficulty getting a loan from ANYWHERE without some rich investors as backups. That's been true for eons. Why not take your plan to the SBA?
SBA funding increased 23 percent Times Record News