Finding Financing (SBA?)

[FloridaStartup]

I have already formulated a business plan, and it looks like my potential bleed for my first year would be roughly 40K max.

I can come up with 20K, I am only 27, a CIC and have a bachelors degree from a top 20 national program, have a proven track record of great P&C sales, and am confident I have what it takes to start a business.

Given this, I am still 20k short. Anyone had success with the SBA, would I even be eligible for a business loan from a bank, especially given current circumstances?

Just trying to find ways to make this thing happen...

 

[moonlightandmargaritas]

Unless you've got hard assets (home equity, etc.) to use as collateral, the bank will turn up their nose at you.

Your best alternative may be credit cards.

 

[djs]

You can try to get an SBA loan, though it will be difficult without much time in the business (as a business owner). You can still try though, I'm not familiar with all of the rules, though I know SBA is difficult to work with, but even today they have money available.

So then the other question is how successful is the business plan if it makes you run $40K in debt the first year? How about years 2 & 3? When do you get to the positive side?

I assume you are setting up a P&C shop, with part of this a build out, staffing and marketing. Is there a way to plan a bit smaller upfront and then plan a move after year 2?

One of the key rules to being successful in this business is being frugal on overhead expenses. This isn't to say don't invest in the business, but it does mean be sure the money you are spending is an investment, not a whim.

Good luck on this. With a good business plan, money can be found, you just have to turn over a lot of rocks nowadays.

Dan

 

[moonlightandmargaritas]

I'm not familiar with all of the rules, though I know SBA is difficult to work with, but even today they have money available.

Contrary to popular belief, the SBA does not make loans.

The SBA acts as a guarantor of loans.

It was tough to find a bank doing SBA loans when the economy was good. Damn near impossible now.

 

[djs]

You are correct, but there are SBA loans. You go to a bank that works with the SBA, fill out the SBA paperwork....

Some friends of mine have recently gotten SBA loans. For property, they are actually loaning money still. For established businesses that can prove viability, they are loaning money. The process is tedious and slow.

Most business owners wouldn't know a business plan if it chased them down the street. Without one, you'll never get a loan. It's not the 1990's anymore!

Dan

 

[FloridaStartup]

No hard assets.

40k is absolute max burn prior to profitable.

I am very confident my business plan will be more detailed and most likely better than anything 95% of the brokers provide. I have an in depth business education.

The agency managment CIC was helpful for a lot of the planning required.

Regarding the size, situation and debt. I am looking to run a P&C shop, avg client size 4K revenue, Max size 250K revenue. I already have a 150K revenue client base that I think about 80% of will switch over after non compete (Or even before depending on what my lawyer says).


Most of the 40K is pure startup. Actual burn for first 6 months would be 26K. I padded it another 14k for crap happens... Estimated profitability is 6-8 months.

2k Computer and equipment, network, phone, etc, some office supplies
3K state licencing, business setup, legal fees
600 a month rent for a business space (home office til month 3)
subscription to ams or something similar (and hopefully cheaper?
Subscription to data sources for marketing 90 a month
Some Gas Expense
etc...
etc...
etc...


I am not even going to get serious or quit the day job until I have a very well established business plan, most of the financing, a solid business plan setup, etc.

 

[moonlightandmargaritas]

I am very confident my business plan will be more detailed and most likely better than anything 95% of the brokers provide.

While important, this represents about 5% (maybe less) of the equation.

Execution is 95%. A detailed business plan is nice, but what is your background and track record in the industry that would give confidence?

Nobody is going to loan you money without hard assets, or a renewal revenue stream as collateral.

I'll stand by my original advice...if you do it, you'll have to do it with credit cards.

Unless you have some generous relatives, that is.

 

[FloridaStartup]

Ive landed 100K revenue annually over the last 3 years...

 

[djs]

I agree with Moonlight. The thing about a business plan isn't that it is on paper (which is a solid start), it's whether you can execute to it. That's the part you have to sell.

It will be hard to get financing if you are not working the business full time. Also, keep in mind that nobody will loan you money for a paycheck for yourself. What you mention above doesn't jive with needing $40K, unless you have a decent paycheck involved.

I'm going to have to agree with Paul, hold tight to your cash available now, get a couple of high limit cards, and jump in.

Dan

 

[FL P&C Broker]

2k Computer and equipment, network, phone, etc, some office supplies
3K state licencing, business setup, legal fees
600 a month rent for a business space (home office til month 3)
subscription to ams or something similar (and hopefully cheaper?
Subscription to data sources for marketing 90 a month
Some Gas Expense
etc...
etc...
etc...


I am not even going to get serious or quit the day job until I have a very well established business plan, most of the financing, a solid business plan setup, etc.

I thought P&C shops in FL had to have public access and you couldn't use home offices. I could be wrong, but that is what I have read.