PDA

View Full Version : Loans without personal guaruntee?



quagss
12-30-2015, 08:28 PM
I recently graduated from Cortland State College. It's a small public school in upstate New York, just south of Syracuse. When I was a student, I spent many an hour working on computers, smartphones, and other pieces of technology for friends of mine. As I was fluent in computer repair and had a lot of free time, I ended up spending close to 10 hours certain weeks just fixing computers. Now, 7 months removed from graduation working an OK job, I still receive an occasional text from someone asking for computer help.

There is an IT/computer company in the town, but they have little to no appeal to students. As Cortland is a small, fairly remote town with a seasonal population, a student with a computer issue has to find help on campus or drive 45 mins to Syracuse to visit a Best Buy. This has given a friend of mine and I the idea to start a student-centred electronic sales and repair company. We know our target customer, and have a largely unoccupied niche to fill.

The issue I see is financially getting started. Until we build up some business momentum and become self-sustaining, my partner and I will be on the hook to register an LLC, secure an office, acquire inventory, and still eat & pay our bills. My question is: is there financing that I do not have to personally guarantee that can help us get going? I don't want to be stuck paying off a loan years from now if it fails. I have incredible faith in our potential here, but Cortland is a very economically-depressed area.

All help is much appreciated!!

vangogh
12-30-2015, 09:20 PM
Welcome to the forum quagss. I know Cortland. I went to school in both Oneonta and Buffalo. I don't think I was ever in Cortland itself, but I've certainly driven around it a lot.

Sorry to tell you, but it's unlikely you're going to get a loan from a bank. Your best bet for financing will be to ask family and friends for the money. Odds are a bank isn't going to lend a couple of college kids money for a business. I realize it's not what you want to hear, but it's true.

I have another idea though. Why not start the business by making house calls for repairs and selling merchandise through a website? You can work with a drop shipper, which is a company that stores and sends the products that you sell. Another approach is to sell affiliate products. I don't mean to suggest that would do this forever, but maybe as a way to test the idea, make some money, and be able to prove to potential lenders that this is a good business for an investment.

Think about how you could start this business in a different way that doesn't cost as much as you're thinking and build it into what you want as money comes in. If you can get the business started without the capital upfront, you'll be able to show family and friends that the business is worth investing in. Find some way to prove the concept of the business. You'll find it easier to raise money that way.

As far as an LLC is concerned you probably don't need one, until you have more wealth to protect. You could start as a partnership, which will cost less. You can always change to an LLC later.

Hope that helps.

turboguy
12-30-2015, 10:12 PM
Even before I read VanGogh's response my thoughts were the same. The computer repair guy we have used for the last 10 years works from his home and either does onsite repairs or takes the computer home to fix. He has a very brisk and prosperous business. You could also just call yourself "John Smith, Computer repair" or something. This is of course if your name happens to be John Smith. Otherwise use your own name since using John Smith would be confusing and you would need a DBA.

So that way you have no expense for location and no legal expense as far as a business name. You would just need to sign up to collect sales tax which has no cost and check with your city to see if you need any permits or licenses.

Your only real cost would be any tools you needed or parts you needed. You could probably avoid a loan. if you do need one friends and family are the best bet.

MyITGuy
12-31-2015, 09:18 AM
The issue I see is financially getting started. Until we build up some business momentum and become self-sustaining, my partner and I will be on the hook to register an LLC, secure an office, acquire inventory, and still eat & pay our bills. My question is: is there financing that I do not have to personally guarantee that can help us get going? I don't want to be stuck paying off a loan years from now if it fails. I have incredible faith in our potential here, but Cortland is a very economically-depressed area.

As others have stated, if you're just starting out, eliminate "securing an office" from your list from now and either offer to fix computers on-premise or offer a pickup/delivery service and then work on them out of your own house/garage or a warehouse type space you take on later on down the road. I personally would advise going the route of offering a pickup/delivery service to ensure you are more productive with your time as there is nothing worse then being on-premise for 3+ hours waiting on Windows updates to download/install or AV scans when you could be doing the same thing to a dozen other PC's. Internet connectivity also comes into play (Slower DSL plans versus high speed copper/fiber)

As far as the rest, I would avoid going the route of securing a loan for what you need...and honestly if you do not have the funds to cover these small costs, its unlikely a bank will give you a loan for them. In looking at your list I would estimate the following:
$300 - LLC Filing Fees
$500-1000 - Attorney/Accountant to generate & file LLC
$0 - Inventory (Unless you want to stock a few hard drives, otherwise I would avoid system specific items to begin with).

Harold Mansfield
12-31-2015, 10:49 AM
I agree with everyone else. You don't need the expense of an office for right away. When you're first starting out all you need is the tools to do the job, a secure place to work, the time, knowledge, some way to market for customers and a way to take money in whatever form people want to give it to you.

Unfortunately there is no such thing as an unsecured, no risk ( which is basically what that is) loan. Not even on the street. The possibility of failure is a real truth. If you're not willing to take the risk on yourself why would anyone in their right mind take the financial risk with their money?

Most people bootstrap. They use their own money, work side jobs if they have to, and build as they go.

Owen
01-02-2016, 10:43 PM
I can promise you you're not getting a loan from a commercial bank or chartered bank. Since you just graduated, I'm assuming you have no credit, collateral, or anything that would convince a bank that you're worth their time and money. If I were you I would seek a family member, as Harold said, and even possibly get an angel to invest. Other than that you're out of luck unless you win Powerball.

BizCoach
01-03-2016, 10:09 AM
Forget the loan and the office location.
Print some inexpensive business cards...talk to everyone you know and start drumming up some business.
Does the college print a school newsletter? do they have an online news source? Can you place an ad somewhere that will get in front of the students?
Where do the students hangout?
You could use a credit card to buy supplies and then pay the thing off when the job is done.

SmallBizFinancer
03-09-2016, 03:31 PM
As far as my advice, there aren't a lot of options out there. You may be able to go the Friends & Family route. If not, my best advice is to not worry about a storefront for now. Just get a DBA certificate (around $10) and do it on the side. Then save up until you can do it full time. Start out in your home. You can market this without a store front. Trying to start big is the biggest mistake made by new/young entrepreneurs.