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  • Banks and Plumbing Businesses

    As many of you know I'm just starting my own business. Here's the updates, they may help other aspiring new owners:

    The Sprinter: I planned for the future. The truck was built with options I might need later, such as heavy duty cooling, hardboard interior, security system, hard partition, interior lighting, towing package, and HD suspension. Overall cost is $48,000 built the way I wanted it. When you order a custom truck you also get your own color choice, not the basic white everyone else has. I have chosen black onyx metallic, no badging, and any other badging/chrome piece will be removed, painted as the truck, and reinstalled. Awesome financing was obtained directly through Mercedes-Benz/AmEx at 2.9% for 72 months. This is better than any bank ever offered. I only required a $500 deposit for the build to be started. Your build may take 9-12 weeks to arrive - it's built in Germany, disassembled, shipped to you, then rebuilt and delivered.

    Loans: Don't fall for the SBA route of financing. It's all good on the SBA website, in bank commercials, and from your SBA consultant. In reality the government only backs 85% of the loan and the bank is free to make more stringent lending rules. Here's one I ran into - 'you need to be in business for 6 months and have proof of $150,000 in gross receipts.' Another bank said, 'get outside financing for the truck and we can give you the rest.' They then said 'no' because 'too many businesses fail'. Another one said, 'sure, we can give you the $35K you need. At 16.99%' I mean, really? With a combined FairIsaac credit score of 780? Really?! Moral of the story: pay off what you can before you apply. Banks say they are willing lenders, but they want your debt to income ratio at 45% or less. (Who has that?) They might be willing to lend if you have own a house. They will not generally take hard assets or land in lieu of a house (what if you have no equity?). SBA loan rate is about 6.36% right now.

    Retirement packages: It sounds bad, but consider cashing in or taking a loan against your retirement. If you are technically unemployed (by definition, I am, based upon the business and finance plans) the rate of penalty for retirement cashing in is a lot less. You may even get the Federal tax returned later. If you have an immediate proof of financial failure - loss of house, back rent, back utilities, etc. - there may even be NO penalties. Consult your CPA.

    Other financial: If possible, get financing from lenders who don't show up on your credit history - family members, private financiers, gifts from grandma, etc. Also, if you have a spouse who has an outside job - structure the loan payment so that, in the event of business failure, the loan amounts can be paid entirely by that spouse's income. Privately owned banks or credit unions may offer a more personalized solution.

    Suppliers: If you want to have a credit account with your supplier that's great. Remember though, they will do a credit check. Multiple hits on your history can hurt you with banks. Try to set up cash/COD accounts until your major financials are done. Then go back and have them run your history for charge accounts.

    The overall theme from official lenders is they want you to have (lots) of money before they will give you a little money. It's depressing, yes, as they all say, to your face, 'you will fail'. Keep remembering, they are all desk donkeys and know nothing about anything outside of reading what their computer tells them to say. They are basically talking heads. They will say stupid things, and I encourage you to call them out on it. (I have $97,000 tied up in paid-for assets and $3000 cash in bank for this business. The bank said we require 15% owner equity in the loan. I need $35,000. Looks like I have way more than needed, right? Not according to them - see above - no house, no other cash, land doesn't count...) They will stutter, burp, fart and then say you will probably fail, it's a high risk business, etc etc. Then they will just say 'no'. Their math and lack of smarts, coupled with being tied to the computer, apparently overrides their common sense - how can anyone with such a huge amount of assets (paid for without outside financing, ie hard work!) fail on a $35,000 loan? You will still get a 'no' but it makes you feel good to make them look retarded. It's small consolation.

    With hard work you WON'T FAIL!!
    ~~

    ... it was plumbed by Ray Charles and his helper Stevie Wonder

  • #2
    Re: Banks and Plumbing Businesses

    Sounds like you got a thought out plan for you. I never did this but I had friends who wanted to loan me money and pay them back at a higher interest rate then the bank is giving them and lower then what the bank wanted from me. This made the idea of borrowing from family or friends more plausible but I just can't do it.

    I really believe it's not what you make but what you spend that makes a company go red. I believe the most important thing to build a company is your customer base....not tools, vehicle, insurance or whatever but always having that phone ringing.....get that figured out and the skies the limit.
    Buy cheap, buy twice.

    Comment


    • #3
      Re: Banks and Plumbing Businesses

      One piece of advise. If youve never owned a black truck, dont start now They are the nicest looking on the road, but god are they hard to keep clean. I had a 2006 F350 I financed thru Ford @ 2.9%, I missed 0% by 2 days. Best of luck in your business.
      26+6=1

      Comment


      • #4
        Re: Banks and Plumbing Businesses

        Originally posted by EJW1 View Post
        One piece of advise. If youve never owned a black truck, dont start now
        I've had a black truck before. No big deal... a little water, a little soap...
        ~~

        ... it was plumbed by Ray Charles and his helper Stevie Wonder

        Comment


        • #5
          Re: Banks and Plumbing Businesses

          My bank pays .01% interest on my business account The bank always takes my money and is always calling me from their investment dept.

          What you need to do is find a smaller local bank and work with them. Get to know them, have a relationship with the staff and manager, and they will bend over backwards for you.

          I've been at my bank location through 5 different bank names. I've even done plumbing there too. If a new teller doesn't know me the first time I see them, they know me the next time. Especially when phoebe joins me.

          Find that bank that I've described and they will be your best friend.

          Rick.
          phoebe it is

          Comment


          • #6
            Re: Banks and Plumbing Businesses

            My suggestion is to for the time being for get about the new truck, actually borrowing the money is usually the easy part, paying it back is the tough part,

            yes truck are a necessity in the businesses, but the truth is they do not make you money, (a different model may save you some time or a trip now and then but really does not MAKE money),
            a used truck in good condition will do you a good job for getting your feet on the ground, keep it clean and sharp, and professional looking, and you will be fine,

            you said $48000 the minimum for a 4 year pay back is $1000 a month, no interest, now say you get a good used, truck for say $16000, may be some paint and logo, on the side or magnet signs, and your pay back price is about $375 a month, also the license and tax and so on, when your starting out you will find the government and others invent ways to suck the money out of your hands, the payments seem to come very often and the balance in the bank seems to shrink many times before it grows,
            new is nice but good used can mean the difference of surviving the first few years and failure,

            unless you have a pre made customer list, getting started may not be that easy,

            If you want to go ahead and spend all that $48,000 use some on the van and keep some in reserve, I have a feeling that one of the first jobs you get will require an investment that you were not counting on, and now days it seems like ever thing will cost a good thousand dollar bill,

            that is MY TWO CENTS,
            Push sticks/blocks Save Fingers
            ~~~~~~~~~~~~~~~~~~~
            "The true measure of a man is how he treats someone who can do him absolutely no good."
            attributed to Samuel Johnson
            ~~~~~~~~~~~~~~~~~~~
            PUBLIC NOTICE: Due to recent budget cuts, the rising cost of electricity, gas, and oil...plus the current state of the economy............the light at the end of the tunnel, has been turned off.

            Comment


            • #7
              Re: Banks and Plumbing Businesses

              Originally posted by EJW1 View Post
              One piece of advise. If youve never owned a black truck, dont start now They are the nicest looking on the road, but god are they hard to keep clean. I had a 2006 F350 I financed thru Ford @ 2.9%, I missed 0% by 2 days. Best of luck in your business.


              I agree, they are also ovens in the warm weather


              Never again

              Comment


              • #8
                Re: Banks and Plumbing Businesses

                Originally posted by BHD View Post
                you said $48000 the minimum for a 4 year pay back is $1000 a month, no interest, now say you get a good used, truck for say $16000, may be some paint and logo, on the side or magnet signs, and your pay back price is about $375 a month
                My payment will be approx $830 a month. Not a whole lot more than my pickup was. The costs of the truck is not such a huge issue. Part of the payback is the durability, fuel savings, and security. I guarantee you will not find any Ford/GM truck with a 10 foot Unicell box getting over 10 MPG empty. My last company had one, it doesn't happen (it also cost $35,000 with less than half the options). The Sprinter, empty, with the same or better useable space gets better than 17 MPG. I also drove one of those, too.

                A used work truck IMHO is generally an accident/down time waiting to happen. They're always POS and have a lack of warranty. And the MB store has at least one Sprinter available for use if the new one needs some sort of service. I checked with my GM dealer. They laughed at the request for a work truck if mine needed service.

                Don't even mention a van. I'd rather drive off a cliff than work out of a van. It sucks.

                The only major purchases I really need other than a truck would be a large sectional sewer snake and an A/C recovery machine. Though, I do have a pump that can get me by for the A/C and I can rent other machines as needed. I already have small snakes, manifolds, Freon, minor stock, etc. I had to lay it all out for the banks via a business and financial plan.
                ~~

                ... it was plumbed by Ray Charles and his helper Stevie Wonder

                Comment


                • #9
                  Re: Banks and Plumbing Businesses

                  I know you live in a different world than I do, and you need to do what is right for you, (and when I use the term van, all I am saying is the term work truck),

                  I do not know I must have better luck than you do on used, yes some times they need some tender loving care, but my last car, I payed $125 at a salvage yard, put tires on it an an alternator and we have drove it for over 100,000 miles, (mechanical cost basicly were the alternator a starter a few seals, and a sensor and exhaust system in the last 100,000 miles and oil changes). my used van is (have not driven it for a few years, as I no longer have a need for it,) we only drove it for over 200,000 miles and it had over 100,000 when we got it may be 200,000 the best was my 69 galaxy, bought it for $600 when I was getting married and all 4 of my kids drove it as well for a school car and in collage, way over 300,000. (lots of tires),
                  and my trucks for the farm are all over 30 years old, and one is 61 years old, still good trucks and do the job asked of them,

                  yes there is some down time, but your doing to have new machines break as well, hopefully less frequently, yes one of my tractors is down right now it need a new injection pump put on, but 10,000 plus hrs is not bad, 5000 on the pump, sort of, had to replace on part in the pump at 5000 hrs.

                  all I am saying is good used is many times a good investment,

                  all I know is you drive that new truck off the lot and you just lost $10,000,

                  and one other thing is making that payment is a lot harder when your paying your self and you may not know where your next pay check is coming from, than when a boss man is writing you out a check ever week or month,
                  Push sticks/blocks Save Fingers
                  ~~~~~~~~~~~~~~~~~~~
                  "The true measure of a man is how he treats someone who can do him absolutely no good."
                  attributed to Samuel Johnson
                  ~~~~~~~~~~~~~~~~~~~
                  PUBLIC NOTICE: Due to recent budget cuts, the rising cost of electricity, gas, and oil...plus the current state of the economy............the light at the end of the tunnel, has been turned off.

                  Comment


                  • #10
                    Re: Banks and Plumbing Businesses

                    I did the plumbing and hvac bit and don't see how to do it in a truck. To much stock you need. The big vans don't get affected by mpg because it's a one time stop because you have everything on your van. I drive a chevy workhorse that I bought for 5k and get 9mpg but don't need to make multiple trips....the first time you forget that dowidget and run back to get it, the fuel saving went down the drain. Check out ebay, for some reason a lot of step van are coming out of new york. The MT45 looks great on paper....cummins/allison combo and they're going for 8-12k. To start a business and be in debt 830 a month is not a good way to start off.
                    Buy cheap, buy twice.

                    Comment


                    • #11
                      Re: Banks and Plumbing Businesses

                      Old tractors and old cars...they gain value after a while, if in good condition.

                      Working out of my pickup right now is the worst. The tools don't fit, there's no room for stock, and it's tearing up the interior. Truck caps have no security and small trailers are just as bad. My finances right now easily cover not only the new truck, but also the insurance for the truck/business.

                      I really don't see what difference it makes - everything gets paid and there is still enough to live on. The banks won't help with refinancing or otherwise. As Rick suggested I will try local banking options. Here, that really means my only options are credit unions. I have found a few that I will be trying next week. There will be no mention of a business and will be applying to consolidate high interest debt only. It's not like I can't pay all the debts, it's that I don't want to pay the higher interest of some loans or a credit card.
                      ~~

                      ... it was plumbed by Ray Charles and his helper Stevie Wonder

                      Comment


                      • #12
                        Re: Banks and Plumbing Businesses

                        Being self employed is a negative as far as a lender is concerned, especially true with being self employed and a start up company. Do you have paystubs from your last co? Does your wife work and have an income history?

                        You and I are in similar situations, except I've done it 25 years earlier. I remember applying for my first credit card and having to pay an annual fee. Now I make the rules and only keep 2.

                        Even shopping for a home loan last year through my bank was not fun. Especially when I owe just 1 more house payment its been 19 years 11 months since I bought. So in 1 month I'm free and clear . With that being said, the loan person still wanted to see a 2 year rental agreement before my paid off home is considered an asset and not a liability they claim I still have insurance and taxes that make it a liability. So basically, i'll shop for a loan eleswhere.and in reality all I was looking for was what I can prequalify for.

                        Rick
                        phoebe it is

                        Comment


                        • #13
                          Re: Banks and Plumbing Businesses

                          I understand your frustration with banks, but they are just trying to protect themselves. You are just starting out you have not proved you are going to succeed at your business. Skill & hard work will not ensure success. They help, but there is more to it to be successful in business. I avoid loans as much as possible, because I feel paying interest is a waste of my money. When I first started my first business banks would not lend much money. Now they ask me how much do I want borrow. My bank wanted me to set up a line of credit with them that would not cost anything unless I used it, so I said okay what do I need to do. After they explained all the paperwork I would need to file every month I said no thanks. My bank rep. said I'm the kind of customer banks hate, because if I borrow money I pay it off in a year.

                          BHD I understand reasoning behind buying used equipment, but in order for that to work you a lot of skill in working on equipment & time. When I started out I bought a lot of used equipment, but I spent a lot of time repairing them also. ( I can fix anything) My best buy was a 1972 F-model cab-over Mack for $500.00 all it need to past inspection was a set of mud flaps. I now mostly buy new the only used equipment I buy is stuff that will get low usage.

                          Gear Junkie a $800.00 monthly payment is only high if you can't make the payment. When I first started out my shop monthly rental was $9,500.00.

                          Comment


                          • #14
                            Re: Banks and Plumbing Businesses

                            Originally posted by PLUMBER RICK View Post
                            Being self employed is a negative as far as a lender is concerned, especially true with being self employed and a start up company. Do you have paystubs from your last co? Does your wife work and have an income history?
                            I have stubs going back to more than 10 years ago, as well as tax papers, too. The wife still has a good paying job. We can prove that there is close to $80,000 coming in every year. We also have awesome credit scores and great histories with no late payments. Yet, because:

                            - we dont own a house
                            - new business

                            they say NO!

                            Even shopping for a home loan last year through my bank was not fun. Especially when I owe just 1 more house payment its been 19 years 11 months since I bought. So in 1 month I'm free and clear
                            Congrats! It's gotta be a great feeling to be out from under such a large debt.
                            ~~

                            ... it was plumbed by Ray Charles and his helper Stevie Wonder

                            Comment


                            • #15
                              Re: Banks and Plumbing Businesses

                              a line of credit is typically attached as a second to your home. so not owning a home is a reason why a line of credit is not easy to come by. that and a new start up business is the other.

                              I was able to buy my commercial property with my line of credit. it's just a second on my home mortgage. plus a line of credit is basically a low interest credit card. right now and for the last several years, a real low interest cc.

                              does your wife have a credit union she can help with?

                              your wife will have an easier time as she is more established with a pay check. self employed at a time was too easy to fudge the numbers and the last several years, banks don't like self employed numbers. tax returns were also too easy to fudge as they couldn't necessarily prove they were legit.

                              you need to have a sit down with the bank branch manager and prove to them that your good for it. or go the shark tank route.

                              rick.
                              phoebe it is

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