Getting a loan while unemployed or working part-time

[jaybirdd]

What are options for someone who who has a 20% down payment and is looking for a long term business loan mortgage (the business includes property) over 20-30 years, but is currently unemployed or works part-time. The business loan would be for an established, stable business.

[Owen]

What are options for someone who who has a 20% down payment and is looking for a long term business loan mortgage (the business includes property) over 20-30 years, but is currently unemployed or works part-time. The business loan would be for an established, stable business.

Depends. If you're taking the loan out under your name, whether it's apart of the company or not, it depends on your credit and collateral (credit being your credit score, collateral being your assets). Let's take a step back and think about it from a bank's point of view. Someone without a job or someone who doesn't even work full-time wants to work full-time with thousands upon thousands of dollars. Your credit score is iffy, and your assets include a car worth about $7,500 at most and you use your credit card mainly for purchases at Walmart.

I work at a bank (intern) as a loan officer and investment management consultant. I primarily work with retirement 401k and IRAs but I do work with loans. Of course I am not legally allowed to do much, and the actual loan officers and investment managers do the work, I am there to learn and give input. I can tell you what we as a bank are going to look for in you.

We check collateral for many reasons, however, the largest being what we can sue you for. You read that right. We have people who calculate risk. We need to be able to figure out if we think you're going to back that loan. If your credit score is trash, it's obvious you're not getting any sort of loan. Why? Because you're too much of a risk. You obviously can't pay off that $30 Walmart purchase then you're not going to pay a $50k+ bill. Bankruptcy is the process in which you sell off assets to pay back as much of your debt as you can, and the only way we're getting money from you before you file is to sue. We also look at your past credit history, criminal record, employment history, etc. so someone who works full-time is going to get a better loan with a lower interest rate than the guy who works at Office Depot. This all depends on the bank. If you're under 25, forget it. You're probably not going to get a huge institutionalized investor. Go with a credit union.

I'm sure you're already aware of this, but I answer these questions because I know you're not the only person that wants to know the answer to this question, someone will eventually Google the question.

[Fulcrum]

We also look at your past credit history, criminal record, employment history, etc. so someone who works full-time is going to get a better loan with a lower interest rate than the guy who works at Office Depot. This all depends on the bank. If you're under 25, forget it. You're probably not going to get a huge institutionalized investor. Go with a credit union.

Maybe your bank is different but I've been working full time hours since I was 16 and if that and credit score were the primary drivers than I should have been able to qualify for overdraft and a small equipment line of credit (<$50K).

When dealing with business buyouts all bets are off - especially if we're talking a small business rather than a Berkshire takeover/merger.

As for the OP, 20% down might be adequate for the commercial real estate providing that there is more than 2 tenants and all show good financials. For a pure business purchase, I doubt that any lender is going to seriously consider this unless there is an extremely high down payment and an even higher secured liquidation value .

[Owen]

Maybe your bank is different but I've been working full time hours since I was 16 and if that and credit score were the primary drivers than I should have been able to qualify for overdraft and a small equipment line of credit (<$50K).

Not primary, but it's there. Let me just give you an example.

Billy Bob
25 Years Old
Works part time at Dunkin Donuts making $10 an hour, 30 hours per week
665 credit score
Owns $35,000 in assets
Never been in jail, no arrests
Has worked only 2 jobs since his first job at 16

Derek Blue
40 Years Old
Works full time at Mansfield Construction Company making $25 an hour, 40 hours per week
598 credit score
Owns $300,000 in assets
Never been in jail, no arrests
Has worked 5 jobs since his first job at 18

Who would we give a better loan to? Derek. We can charge him a high interest rate and we still have a higher chance of getting paid versus if we did the same to Billy since he makes $25 an hour, or roughly $52,000 a year.

[Fulcrum]

I know what you're getting at Owen yet there is one metric (more than that actually but I don't want those floating around the interwebs) that I left out. I'm self-employed and have been since Aug 2012 and pay taxes on 3x the amount of income I actually take home (proprietor so I am the business). I'm also able to live on less than $15K/year gross.

There is a variable that you didn't include in your two examples - current debt owing.
Let's say Billy Bob has no debt attached to his 35K in assets while Derek Blue has $280K ($240K mortgage that's perpetually at risk of going under water and $40K in vehicle loans/credit cards) in debt attached to his $300K in assets - now who's the better risk? Who am I going to have to spend more time servicing? Who is going to cost me more sleep?

When lending money, unless it's predatory, the primary concern should be the initial return of funds followed by profit.

Business lending is a different beast from consumer lending altogether. Would you be surprised to hear that I get credit card offers on a weekly basis? Yet I can't get a secured LoC for equipment purchases. My only debt currently is rolling credit card (short term) and personal credit line bridge funding (used only when cash reserves will drop below a preset amount and to prevent a 23% interest rate on the credit card).

As for the OP, I can't really see him getting any kind of loan unless it's for the commercial real estate and the property itself can support the payment on 2 legs (50% capacity).

[Dwayne]

<style type="text/css"><!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--></style>Getting a loan is a dangerous thing; there are so many situating when people made a mistake a chose the wrong company to get a loan in. I've been dreaming about buying my own house, but haven't had enough sum of money, so I took a loan. I had huge problems which have ended recently. I was lucky to find Debt Quest USA in New York (https://debtquest.com/debt-relief-in-new-york/), where I got professional help. So I recommend everyone to think twice before taking a loan.

[beetee]

OCWEN is bad news. They own prop mgmt company, fund mortgages and collect when it goes bad. Run!

[beetee]

Dwayne, getting a loan is not a dangerous thing. This is a business site. There is good debt and bad debt. Yes you have to do your due diligence. We have business loans. This is to buy or grow your business.

Getting a mortgage is very good and there are great mortgages out there. How else are you supposed to get a house?

I am against debt consolidation because ALL your debt can turn into collections. Then you really have a mess.

[Kenneth Funk]

Possibility of getting loan also relies much on your current credit score. So, check it out first and then find a legitimate site to deal with.

[SkyWriting]

When dealing with business buyouts all bets are off - especially if we're talking a small business rather than a Berkshire takeover/merger.

So what does that mean? The issue is the business profitability?