Start up funds - tanTALK

Rollo · 08-18-2004, 03:41 AM

I’m looking to open up my own salon. I have good credit rating, fair amount of cash, but no assets. To my understanding most banks want 80 to 90% of the loan secured in assets. I think leasing may be a bad option just because of the high interest rate. Anyone start off in similar situation? Anyone use a SBA loan backed by the government? Thanks in advance for any help with this.

Rollo · 08-19-2004, 08:04 PM

So, everyone out there either has nothing to say or has had 80-90% of their loan. I wish I was as fortunate, but honestly it seems the way that loans are set up, the only way to start up a new business is to have an existing business or property for collateral.

West Side Tanner · 08-19-2004, 08:09 PM

Cash is not an asset?

tanu01 · 08-19-2004, 08:18 PM

Not if your not willing to spend it!
Flick

StudioSun · 08-24-2004, 11:09 AM

Rollo,

I have a tanning studio opening in November and after weighing all of the financing options, leasing the equipment was the way to go for me. Check into leasing it from a bank in your area, not a leasing company. I found that the interest rates were much less at my local bank, and they were able to offer me approval in less then 2 hours. Also, check with your bed manufacturer about profit sharing programs where for a small fee they will put the bed in your salon, they will maintain and change the bulbs for free, and you pay them a fee for every hour of usage. The payments may be higher (if your making a good amount of money, so are they), but at least it frees up some cash for working capital, and if you want to purchase the equipment down the road, you can. Also, many people dont realize the tax benefits to leasing. In most states a lease payment is recorded as an operating expense which is a huge benefit. Check with your accountant on that. Try to aviod going through the SBA. I was originally approved for an SBA loan, but once I found out how much documentation you have to do on an ongoing bases, it seemed like more trouble then it was worth. Well there's my two cents. Good luck with everything. Feel free to PM me.

Steve Underhill · 08-24-2004, 02:46 PM

You might want to consider an SBA loan.

Rollo · 08-24-2004, 04:26 PM

StudioSun thanks for your two cents. I'll look into it.

OasisTan · 08-26-2004, 07:11 PM

I have been trying to get financing for my new salon since june. I have all but given up. We have decided to use most of our savings. All the banks wanted our house for collateral, or to simply give us a second mortgage. We decided the house was NOT going to be part of the deal, it is paid for and if nothing else, we have a place to live. Someone told me that in 15 years they know of only 2 SBA loans for tanning salon, this was a salesperson, not anyone connected with finance industry.
I have decided to lease everything I can. Even the modular walls. I have been told they are considered furniture, not fixtures. Therefore they are deductible also. woo hoo.
I am curious to know if anyone has comments on PureTan International and/or ProSun.

tanu01 · 08-26-2004, 07:14 PM

CHOOSE YOUR LEASING COMPANY VERY CAREFULLY!!!
Flick

engfant · 08-26-2004, 07:45 PM

Remember if you lease and you get in financial trouble, you got basically nothing in assets.

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08-18-2004, 03:41 AM	#1 (permalink)
Rollo Join Date: Aug 18 2004 Posts: 7 Rep Power: 0	I’m looking to open up my own salon. I have good credit rating, fair amount of cash, but no assets. To my understanding most banks want 80 to 90% of the loan secured in assets. I think leasing may be a bad option just because of the high interest rate. Anyone start off in similar situation? Anyone use a SBA loan backed by the government? Thanks in advance for any help with this.

08-19-2004, 08:04 PM	#2 (permalink)
Rollo Join Date: Aug 18 2004 Posts: 7 Rep Power: 0	So, everyone out there either has nothing to say or has had 80-90% of their loan. I wish I was as fortunate, but honestly it seems the way that loans are set up, the only way to start up a new business is to have an existing business or property for collateral.

08-19-2004, 08:09 PM	#3 (permalink)
West Side Tanner Join Date: Dec 27 2003 Location: Florida Posts: 1,818 Rep Power: 21	Cash is not an asset?

08-19-2004, 08:18 PM	#4 (permalink)
tanu01 "The Man" Join Date: Mar 4 2003 Location: ohio Posts: 4,015 Rep Power: 23	Not if your not willing to spend it! Flick

08-24-2004, 11:09 AM	#5 (permalink)
StudioSun Join Date: May 16 2004 Posts: 6 Rep Power: 0	Rollo, I have a tanning studio opening in November and after weighing all of the financing options, leasing the equipment was the way to go for me. Check into leasing it from a bank in your area, not a leasing company. I found that the interest rates were much less at my local bank, and they were able to offer me approval in less then 2 hours. Also, check with your bed manufacturer about profit sharing programs where for a small fee they will put the bed in your salon, they will maintain and change the bulbs for free, and you pay them a fee for every hour of usage. The payments may be higher (if your making a good amount of money, so are they), but at least it frees up some cash for working capital, and if you want to purchase the equipment down the road, you can. Also, many people dont realize the tax benefits to leasing. In most states a lease payment is recorded as an operating expense which is a huge benefit. Check with your accountant on that. Try to aviod going through the SBA. I was originally approved for an SBA loan, but once I found out how much documentation you have to do on an ongoing bases, it seemed like more trouble then it was worth. Well there's my two cents. Good luck with everything. Feel free to PM me.

08-24-2004, 02:46 PM	#6 (permalink)
Steve Underhill Join Date: Apr 21 2004 Location: Frisco, TX Posts: 1,502 Rep Power: 21	You might want to consider an SBA loan.

08-24-2004, 04:26 PM	#7 (permalink)
Rollo Join Date: Aug 18 2004 Posts: 7 Rep Power: 0	StudioSun thanks for your two cents. I'll look into it.

08-26-2004, 07:11 PM	#8 (permalink)
OasisTan Join Date: Aug 26 2004 Posts: 7 Rep Power: 0	I have been trying to get financing for my new salon since june. I have all but given up. We have decided to use most of our savings. All the banks wanted our house for collateral, or to simply give us a second mortgage. We decided the house was NOT going to be part of the deal, it is paid for and if nothing else, we have a place to live. Someone told me that in 15 years they know of only 2 SBA loans for tanning salon, this was a salesperson, not anyone connected with finance industry. I have decided to lease everything I can. Even the modular walls. I have been told they are considered furniture, not fixtures. Therefore they are deductible also. woo hoo. I am curious to know if anyone has comments on PureTan International and/or ProSun.

08-26-2004, 07:14 PM	#9 (permalink)
tanu01 "The Man" Join Date: Mar 4 2003 Location: ohio Posts: 4,015 Rep Power: 23	CHOOSE YOUR LEASING COMPANY VERY CAREFULLY!!! Flick

08-26-2004, 07:45 PM	#10 (permalink)
engfant Join Date: May 20 2003 Posts: 9,301 Rep Power: 29	Remember if you lease and you get in financial trouble, you got basically nothing in assets.

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