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View Full Version : Securieng a large start up Captail with a rock solid bussiness plan



Capt.Hayes
04-21-2014, 11:21 PM
Hello all,

I have worked as a towboat captain for the last 6 years and have 8 years in the industry all together. It has been my dream to buy my own boat and start my own company and run it my self. About 2 months ago an opportunity fell into my lap and I started chasseing it down. I have successfully landed a contract with a barge company to push there barges and now have 2 months to secure a towboat ( inland tug boat) or I will loose the contract and all my work goes down the drain. With the current contract I will Net $108,000 a week. Yes that number is correct, its no typo. I have located a towboat for sale and it is at a really good price of $550,000. How do I convince a bank to loan me $550,000 to purchase the boat and another $200,000 for the first 2 months start up capital? I have a rock solid business plan, summary of funds, experience in the field and a rock solid contract. All I am missing is money. As far as personal finances go, all I have is a house note, but I don't have a lot of money in the bank because I've been pouring all of my personal money into getting my self debt free. I am a veteran and have been told there is money out there for veterans to start small business but $700,000? Will bringing the contract, summary of funds, and business plan to the bank be enough or am I a long ways off? Any and all advice is much needed right now.
Thanks in advance.

Harold Mansfield
04-22-2014, 09:17 AM
First of all, Welcome to the forum. Feel free to swing by here: http://www.small-business-forum.net/introduce-yourself/ and introduce yourself.

I don't know anything about your industry, and I never had to secure funding..I bootstrapped.

But on the surface, with contracts in hand, you seem to be in a better position than most.
Being a Veteran, if you've never used your benefits or G.I. Bill for anything else like education, or housing that loan guarantee should still be available to you. However, yes $700k is a bit more than I've ever heard of that covering.

I think your first step would be to speak with someone in Veterans services to see what your options are and what you may be able to secure on your own.
This may be a situation where you piece together the money from various sources including a private investor/partner. Some money in veterans benefits may show a partner that you have some money of your own.

You may also investigate grants. Different gov departments give grants to small businesses in certain industries..wherever there is a need for growth or improvement.

Just to give you an idea, here's a page where the EPA gave recovery (Stimulus) grants to businesses and organizations who converted their fleet from diesel to natural gas and other cleaner fuels.
National Projects | National Clean Diesel | US EPA (http://www.epa.gov/diesel/projects-national.htm)
FEMA gives grants for companies in Maritime security
DOT gives grants for Maritime businesses and industries that fit a certain criteria.

These aren't exactly what you need, I just listed them as an example. You wouldn't think that the EPA would give a grant to buy school buses, or replace a crane. That's why you have to look carefully at who gives out what. The criteria of what they make some grants available for changes every fiscal year, and some are the same every year.

Also every year the money MUST be given or spent.

The reason I'm mentioning grants to you is because you're a veteran, you have contracts in hand, and operating a tug boat falls under a whole slew of government agencies that give out grants to boost, clean up, or redevelop certain industries. There also seems to be a lot of grant money for maritime industries at the moment.

$700k may not be as easy as just walking into an office and getting a check. You may have to do some real leg work and exhaust a lot of options before you find the right combination of funds.

Based on what you've said, I'd be willing to bet there is a way to pull this off, but it's not going to fall into your lap.

Also if you find a grant to apply for, get a professional to help you. Not a company that promises to get you grants...those are scams. I mean a professional service that writes the applications properly and can consul you on how to get that application into the hands of your local Congressman along with the appropriate agency. Grants are a competitive, dirty, back washing business.

Fulcrum
04-22-2014, 05:30 PM
I think your best options may be to find a leasing company or try to include the seller of the tow boat somehow in the deal. Given the 2 month time frame going the route of grants or traditional bank financing may take longer than you can afford to wait.

The more I think about it, you may be best suited to involve the seller of the boat early on, try to factor your A/R, take out only what cash you need to live off of, and pay off everything else (while building a reserve fund).

Brian Altenhofel
04-23-2014, 01:01 AM
I think your best options may be to find a leasing company or try to include the seller of the tow boat somehow in the deal. Given the 2 month time frame going the route of grants or traditional bank financing may take longer than you can afford to wait.

The more I think about it, you may be best suited to involve the seller of the boat early on, try to factor your A/R, take out only what cash you need to live off of, and pay off everything else (while building a reserve fund).

Lease or seller-financing will probably be the fastest route on getting the boat.

As for the rest, you can always ask around for private short-term investments/loans. I personally know of some retail operations who hit up private parties on a regular basis when insane deals are offered by their suppliers and they know they can move the merchandise within a month or two. With a $100K/wk net contract in-hand and needing $200K of startup capital, that sounds very viable (assuming you're using "net" properly). It just depends on who you know in your network. That's why one of the most important business skills one can have is networking.

Harold Mansfield
04-23-2014, 10:51 AM
I must have skipped over the 2 month time frame. Yeah, skip everything I said. That'll take months and you need a break now.

mrphuntt
05-08-2014, 11:35 AM
Good morning Capt. Hayes. You have an exciting plan their. Do you still need help obtaining funding? If so, I may be able to help. Cheers, Peter Tiffany

Capt.Hayes
05-10-2014, 02:07 AM
Yes we are still in need of funding. Please feel free to contact me @ capt.hayes@yahoo.com at your convenience.
Thanks, Brandon Hayes

phanio
05-12-2014, 09:17 AM
There are several options that I can think about.

Have you simply found a local bank that offers SBA loans. The SBA does have special programs for vets (I am one myself). Talk to them first.

It has been mentioned for seller financing on the boat - ask - see what they will say.

Lastly, with the contracts you have in hand, you might be able to factor those contract (receivable factoring or purchase order financing) - do a web search for either alternative loans or factoring loans and talk to them about the value of your contracts.

Know that most lenders will only provide the money needed to purchase the boat secured by the boat. The remaining $200,000 you might need for operating capital will have to come from another source - but, with factoring, you might be able to hit all of it

Fulcrum
05-12-2014, 04:33 PM
Lastly, with the contracts you have in hand, you might be able to factor those contract (receivable factoring or purchase order financing) - do a web search for either alternative loans or factoring loans and talk to them about the value of your contracts.

The OP cannot factor the contracts. No work has been performed so no invoice has been generated; therefore, there is no invoice to sell to a factor.

Factoring is still an option here, but the seller of the boat needs to be included in any transaction as long as he still holds ownership to the tug.

Ex - OP gets permission from the seller of the tug to lease the boat with payments beginning 2-3 months later. The OP performs his service and is able to generate invoices. He then sells the invoice, to a factor, for 75% (random number here) upfront and an additional 20% to be reimbursed upon invoice payment.

phanio
05-25-2014, 09:20 AM
The OP cannot factor the contracts. No work has been performed so no invoice has been generated; therefore, there is no invoice to sell to a factor.

Your comment is fine should he only be looking for A/R factoring - but, there are more types of factoring than just that. Plus, most A/R factors will factor other financial assets like purchase orders - which he has!

With purchase order financing, only the orders and payee matter and with orders in hand but needing work to be done, a factor will fund up to 100% of the costs needed (including labor) to get the work done - factoring is not just for accounts receivables (where the work has to be already done). Search for purchase order financing and talk to some of those companies.

Plus, as there are many ways to factor - there is nothing to say that any alternative lender may not help finance this person if they (they alone) think there is value there. But, this person - the Capt - needs to get out there and start letting those potential people know what the deal is and then see if they want to play - and that means networking with all factors.

FVA
06-26-2014, 08:13 PM
You need to bring in an outside investor. No bank or institution is going to do that deal for you. If you have the contracts in hand and they can be verified (meaning we need to talk to them directly), then we can help you. The net income seems quite high, though I'm not doubting you. But based on your numbers, you can make the investor whole in only 7 weeks. If that is true, then send me an email and we'll see what we can put together. rw@firstvanguardadvisors.com