Have you shop owners have tried to go to the bank and get an expansion loan recently?

[Shop owner]

I have a friend that’s been in the business for over 20 years and he finally decided (yes even in this climate) to venture off on his own. He’s certainly paid his dues and worked his way up the ladder all the way to GM when he made his choice. Any way as this dream evolved into a very serious venture, he had all ready scoured the internet and found the equipment he wanted to purchase and he had three pretty darn solid customers and a pretty hefty word load lined up out of the box!! He went to his local branch (no names but it’s a national bank) and asked for a small business loan. He’s built rock solid credit on his own so he felt he’d be a shoe-in for a small loan. The bank gave him two options,,,
1) Yes we’ll give you a loan but since you’re in manufacturing it will be at a 35% interest!!! Or option B) we’ll lend you the money against you’re personal credit at 16% interest but don’t tell us it’s for manufacturing…. Hell the way I read this the cards are all ready stacked against us!! In the banks eyes, we’re all doomed to fail!! Any body else have experiences like this or heard of any? curious..

[Shop owner]

Anyway I hope you still get the message. lol

[sebtool]

I know it's a hassle, but I'd tell him to go thru the SBA. SCORE may be able to help too. It's going to take a little longer, but should be worth it.

I did the same thing as your buddy. i always try to stick to local suppliers and commodities if I can - it's just good business for a small shop. BUT - $$$$ are a whole different ball game. Our small town (pop. 6200) hot shot accountant who was recommended to me, and the local bank which he recommended (found out later that he's on the board! go figger) broke it off in me pretty hard. Even after I took the accountant's 'How To Start a Small Business' class at the local college.
That was 8 yrs ago, and I'm still paying for it.... It can take awhile to work a boot out of your butt without causing any more pain than you've already suffered - and that's the voice of experience!
If I'd known then what I know now(ain't hindsight great???) I'd have gone thru the SBA, after consulting with SCORE. The time you spend with those people is well invested. you can take a Saturday seminar from them (free back a few yrs ago) and learn quite a bit. but better than that, are the contacts you can make with soem of the counselors, who are all retired business owners and executives. Granted, there are alot of horror stories out there about time frames, paperwork, etc., but with some assistance, you should be able to get things moving fairly quickly. Not the 4-8 months alot of people claim. Closer to 4-6 weeks, and approval can be as fast as 1 week, depending on the agent involved, as well as who you've got in your corner pushing for you. That's where the contacts from SCORE come in.
I was pretty naive back then, probaly still am. But with the info I learned, I wouldn't have been screwed to the wall quite so bad. Problem was, it was too late for my situation. Hopefully your buddy won't make the same mistakes.

Tell him good luck!

PS - Rule #1 -DO NOT!!!! Under any circumstances let your wife handle the books & bills! Take my word for it - you will pay dearly......

[Doogleass]

The banking industry is a disgrace. When I was a young man, I held bankers in high esteem and viewed them as true professionals. However, after some very painful lessions in a contracting business, I came to the conclusion that they are among the dumbest members of the white collar workforce. The only evaluation tool they can use is to compare your data to that of the compiled results for your industry. If your industry is suffering for any reason, you will be massed into that group and will be scorned by the bank.
They have no grasp of the element of character and ability - they wouldn't recognize either if they slapped them in the face.

I often think of an old western movie that had a blustery newspaperman who would go into tirades whenever he heard of some injustice or of an unscrupulous business person. To paraphrase him, "They oughta round up all bankers, hog-tie 'em, tar and feather 'em, and run 'em outa town on a rail!". It is truly a disgrace that honest, dedicated entrepreneurs in this country have to deal with the demoralizing efforts they make to try to attract bank support, while some schemer with an opportunity that is too good to be true can get them eating out of his hand.

Good luck to you!