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Thread: $20,000 loan help

  1. #1
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    Default $20,000 loan help

    A few months back I started building a garage, office, and warehouse. I had an unforeseen fire code issue that was $16,500 that was not budgeted. The building is water tight and moving along. So far everything has been paid cash.

    To finish Iíll be about $18,000 short. I'm planning on going to the bank later this week but trying to get the paper work together. I did talk to the loan officer and she told me to just bring 5 years of tax returns, insurance, and business license. I know 2 months ago my credit scores were 790 to 820 and my wife's was 780 to 795.

    We have decided to ask for $20,000 and want our payments between $900 and $1,000 (Plan on paying off the loan in 6 months). I know banks like secured loans and could use the house (paid off). I've been told it's a PITI to get a construction loan and adds loops to jump through. We talked about just getting a personal loan but higher interest rate. We have also thought about getting a loan from my wifeís 401k but don't know much about this.

    I'm sure we have over thought everything and it would be nice to have some out side input.


    PS. Wife is pregnant and is kicking my stuff out of the guest bedroom, office, spare bedroom, and the garage.

  2. #2
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    Hi mailorder,

    Not trying to hammer on you, but before you go to the bank, you better double check your math.

    We have decided to ask for $20,000 and want our payments between $900 and $1,000 (Plan on paying off the loan in 6 months)
    At $1,000 a month over 6 months, WITHOUT interest, it's still only $6000.00. I would expect that the payment for 6 months would be about 4x that. But that's not the issue.

    You seem to be in a good position to get the loan, but if the 'construction' part is the issue, (and you're as strong as you claim) you may just be better off with a line of credit. Write the checks... get the job done... and pay it off as quick as you can.

    Hope this helps! Good luck!
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    The math does seem off. Are you planning on paying back more than the payments each month? Are you positive you can pay off the loan in that short a time? Where will the money come from?

    I'm just trying to understand the situation better.
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    With my mail order before taxes I do between $2,400 and $3,600 a month without (male) holidays. November and December it should double to triple. I will be making a few large orders in the next few weeks to different venders that will tie up cash in product.

    I normally do 75 estimates a month with is $3,750. Late October I should get paid for a commercial job that currently I'm currently running should be about $5,000 + bonus. There is 4 small checks coming from insurance companies in the next 60 days where I worked as a mediator for other contractors.

    I set aside 45% of everything made for taxes, insurance, and stuff.

    My wife works as an ADON of a 400 bed assisted living and nursing home.

    We made a rule when I started working for my self that we would keep out monthly bills at a level that her job could pay our monthly bills witch sets the loan payment at $1,000.

    I did add up what I think I will make over the next 6 months and do feel that I could pay the loan back off in 6 months.
    Last edited by mailorder; 09-13-2011 at 11:36 PM. Reason: spelling

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    Post Impressionist Array vangogh's Avatar
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    The confusing part is that if you're going to pay $1,000 a month for 6 months that's $6,000. I'm not sure how you could pay back a $20,000 loan with only $6,000. I apologize if I'm missing something, but that's the part not adding up.

    Aside from the above confusion it sounds like you have a good credit history and collateral to apply for a loan. It also sounds like you have enough money coming in to make payments. I'll be the first to say I'm not an expert in banking or how banks decide to give out loans, but I'm thinking those 3 things are all in your favor.
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    Quote Originally Posted by mailorder View Post
    We made a rule when I started working for my self that we would keep out monthly bills at a level that her job could pay our monthly bills witch sets the loan payment at $1,000.
    I plan on paying as much as I feel I can pay each month.

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    Post Impressionist Array vangogh's Avatar
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    Ok. That's what I was asking originally. I get it now. You want the payments to be $1000 or so, but you plan on paying back more. Makes sense. I take it the lower payments are a just in case.

    Sorry I don't know more about banking and loans to help with your original question. Have you thought about a straight business loan as opposed to a personal loan. You do seem to have the collateral and ability to pay back the loan. Or would a business loan mean you have to say it's for construction and then be back into a construction loan?
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    I don't think I have any real business credit. I do have 1 business credit card with a limit of $1,000. When I got it 2 years ago my limit was $750. But I have no idea what my business credit score is.

    My wife made a call about getting a 401k loan and was told not to do it unless there was no other way to get the money.

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    Again banking isn't my area of expertise, but you seem to have collateral and a business in place making money that should help convince the bank you can pay back the loan. I would think checking into the business loan would be worthwhile. Of course if a personal loan is easier or offers better rates might as well see about that too.

    Have you checked with the bank yet?
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    Were going Friday morning to sit down and talk to the loan officer. I did talk to her this morning for about 20 min and drop off the information I had put together so she could go through everything.

    She told me she would call me about 9:00 Thursday morning.

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