Easy loan to get? What's the deal with lending anyway...

I need 50K. I can call it a business loan, or whatever. It is not to get out of debt, because I have almost none. I want to buy a piece of property that is also a business, and unlike a residential loan, which banks want to give me if I simply smile nicely at them, they want 30% down for this. Makes no sense to me - a residential loan is nothing but a drain on me, this property/biz can actually service the loan itself. But even if it didn’t, I could pay the mortgage without breaking a sweat. What is the logic of making it so much harder to get into than a residential loan?

Anyway, the purchase amount is relatively tiny, but I don’t happen to be sitting on the down. This whole thing came up suddenly. Can anyone point me somewhere I might be able to get a loan to help with the down and renovations? I have good credit, almost no debt to speak of, and my current business has excellent positive cash flow. in my puny brain, it seems I should be able to get a small loan like $50k without much problem. Can I?


Why don’t you get the residential loan?

There could be any number of reasons, but I suspect it’s because the added possibility of failure or bankruptcy. You could get an idea of the chance of a personal bankruptcy from looking at credit reports, but it’s more difficult for a business, which can fail for reasons that don’t show up on a credit report (e.g., Wal-Mart opens down the block, the market for buggy whips takes a downturn). So the bank tries to cover for that.

Also, I doubt a consumer could get a $50,000 loan without putting something down.

Your best bet, of course, is to show around and look for another bank that might have a different policy.

It has nothing to do with the profitability of your buisiness. The interest rate of a loan is based on the lenders perceived risk of lending you the money.

Think of it this way. If a bank gives you a home loan, the bank can alway foreclose on your house. Put it up on auction, and recoup some or all of their losses. A business loan is a lot riskier. Nearly 4 out of 5 businesses fail. If your company goes out of business, the bank may never see their money again.

So basically, business loans are harder to get than home loans because they are riskier for the bank.

Ask your bank. If you have a 401k, you may also be able to borrow against it.

Stoid! Welcome back, haven’t heard from you for a while.

As was stated by Bill H., get a residential loan. That’s the easiest, fastest and best solution to get $50K in a hurry. Banks normally love to provide 2nd mortgages and/or lines of credit against any equity in your house… sometimes even over 100% of it’s value! Rates are low these days (~7.5%)and once you have a positive cash flow for your new business you can pay it off. You can use that money for whatever you want… hell, you could go to Las Vegas and blow it on hookers if you felt like it.

Do you have lots of unpaid receivables in your current business? You can get a factoring loan against those at a pretty reasonable rate. Have a lot of capital equipment? You can get a lease loan against the equipment to generate cash for your existing business.

Unless you ARE Walmart most banks will view a new business venture as risky and will hedge their bets as best they can. It doesn’t matter that you are a good citizen with good credit and a profitable business already…

If you don’t want to borrow from your house, don’t have retirement accounts you can borrow from and don’t have relatives you can borrow from you will have to find a bank that will give you a better deal than you currently are looking at… but it may take a while. Good Luck!