some questions on starting a small bussiness

[DarkManX]

I got a small bussines idea... And got a couple of questions. It would probly take about 50-60,000$ to get this all setup and running so that means I would need to get the money from a bank. I know you gotta have a bussines plan for the bank but the question is what if the bussines in not successful? I know the bank would take over and sell everything but that might not make enough money so will i be obligated to pay or what? Or is that what bankrupcy is for? but I dont want to go bankrupt and ruin my life for a few years without being able to get any type of credit.

 

[kranky]

The key issue is the bank wants to see you put up YOUR money. They won't be willing to loan you the money if they are taking all the risk, because they know so many small businesses don't make it.

If you don't have a decent amount of money to put in, you'll never get a loan from them for the rest. And you will have to be personally liable for the loan, meaning you will have to pay.

 

[dabuddha]

i thought they passed new bankruptcy laws where you're still liable for your debts even afterwards

 

[PsychoAndy]

Originally posted by: kranky
The key issue is the bank wants to see you put up YOUR money. They won't be willing to loan you the money if they are taking all the risk, because they know so many small businesses don't make it.

If you don't have a decent amount of money to put in, you'll never get a loan from them for the rest. And you will have to be personally liable for the loan, meaning you will have to pay.

Kranky is right. No sane bank will cut you a loan for $60k to START a business unless there is some major collateral involved. Hell, a family friend has 2 restaurants that gross well over a million a year each, and the bank is only willing to lend him $50k.

Heres the thing: Banks will lend you money after you need it. A lot of people, like youself have the conception: I have an idea, I'll pitch it to the bank and get them to front me all the money to do so. Welcome to the real world. The chances of a small business failing withinn the first year is very high, and banks wont accept the risk unless you put up your house or other large assets for collateral.

-PAB

EDIT: For the sake of conversation, lets say you do get a loan. And lets say you default. There will probably be a personal guarantee clause in the loan, so the bank can lay claim to the assets of the business, as well as your personal belonings.

 

[DarkManX]

well what if u dont have a house? or anything u can give to the bank?

 

[CPA]

in your case, if you don't qualify for a sba loan (7a loan) you will most likely be out of luck, especially with no collateral to support the financing. Keep in mind, even an sba loan requires a certain amount down and >20% owners personally guarantee the loan. Take a look at Small Business Administration for some more info and ideas. good luck, I respect and envy anyone willing to risk themselves by starting their own business.

 

[PsychoAndy]

Originally posted by: DarkManX
well what if u dont have a house? or anything u can give to the bank?

2 words. Loan Denied.

-PAB