Oh FUN! Financing! Bad credit score, co signers, 60,000 loan.

[Martymar93]

Hey guys, so I am writing this in frustration. I always knew finding funding for a small business was going to be hard, but not this hard.

So I am curious to know what are my chances of getting approved for a 50-60k loan with two co signers who have credit scores of 650 and income of 25k a year? I am disabled and make 10k a year.

Thank you in advance guys. Also my credit score is bad but I recently paid all debt off IN FULL. My bills took a hit during my period of obtaining disability.

Thank you!

[vangogh]

Banks don't lend you money because you need it. They expect to make money when you pay them back and they want to make sure as much as possible that you'll be able to pay them back. A 650 credit score is considered fair. I doubt a bank would lend anyone $50-60k based on cosigners who who together don't make that much money in a year.

What's your business? Do you have a business plan to present to the bank? How is your business going to make money? How is the loan going to help you grow your business?

[Martymar93]

Banks don't lend you money because you need it. They expect to make money when you pay them back and they want to make sure as much as possible that you'll be able to pay them back. A 650 credit score is considered fair. I doubt a bank would lend anyone $50-60k based on cosigners who who together don't make that much money in a year.

What's your business? Do you have a business plan to present to the bank? How is your business going to make money? How is the loan going to help you grow your business?

Hey Vangogh,

I have a business plan and paid 3,500 for it. (Can you beleive that) My business is a Cannabis business. So the business will generate customers through sales. The loan will help me grow my business by

A.) Allowing me to startup.
B.) Obtaining profit from customers.

I believe in my business plan probably just like everyone else. I don't have any doubts about lenders lending to me , I just wonder how possible it is to obtain 60k between 3 24-28year olds who only collectively make near 60k a year. They have really fair credit scores(650) but mine is poor.(507 currently)

[nealrm]

You paid $3500 for a business plan??? and it didn't even include how to get financing???



To be honest, with the feds recent statement about Cannabis and your co-signer earning just over the poverty level, I don't see anyone touching this loan with a 10 foot pole. Look for a way to start your business without a loan.

[Martymar93]

You paid $3500 for a business plan??? and it didn't even include how to get financing???



To be honest, with the feds recent statement about Cannabis and your co-signer earning just over the poverty level, I don't see anyone touching this loan with a 10 foot pole. Look for a way to start your business without a loan.

Well I was told that an in-depth business plan would cost. Around 7k-10k. Also, are you sure know what your talking about? 60k isn't that much money to be honest, why wouldn't a bank loan that when between the 3 of us we make 60k in one year?

[nealrm]

Let's see, do I know what I am talking about. Business owner for over 10 years, prior work in venture capital, MBA from a top 20 program..... Maybe yes.

First, salaries can go away. Banks want hard collateral, mostly a home with equity.

Second, the federal government just stated they are going to go after those selling cannabis. Banks tend to not like to loan money to businesses that may be shut down.

Third, business loan typically run 6-8 years. Currently rates are around 7.25%. This would require a monthly payment of $825. Can your co-signer handle that?


You have a business plan, how much will it take to rent and stock your store?

[turboguy]

Most lenders who loan to businesses want a year in business before they will make a loan. Half of all businesses fail within a year so any new business is much riskier. If your two cosigners have more than 60K in assets it might be possible to get a loan. The fact three of you will be signing for the loan may help a bit. It never hurts to try but I do think there is a good chance you may not be able to find a bank to loan you the money. Are you planning to grow the weed or set up a retail store?

Cannabis has some risk to it as a business. I believe there is a chance the federal government my enforce the laws against growing it and using it trumping the state laws. Personally I don't think it will happen but the Federal government has talked about doing that. It is also a business that tons of people are jumping into and that too makes the risk of failure greater for everyone.

[Paul]

Hey Vangogh,

I have a business plan and paid 3,500 for it. (Can you beleive that) My business is a Cannabis business. So the business will generate customers through sales. The loan will help me grow my business by

A.) Allowing me to startup.
B.) Obtaining profit from customers.

I believe in my business plan probably just like everyone else. I don't have any doubts about lenders lending to me , I just wonder how possible it is to obtain 60k between 3 24-28year olds who only collectively make near 60k a year. They have really fair credit scores(650) but mine is poor.(507 currently)

Oh Marty, $ 3500 for a plan. You could have grown some pot with that money! But here is the real problem. Forget the credit scores, the odds of a bank financing a cannabis business are about 0%. They will get a good laugh over it. They probably can't even open a bank account for you. Think of something else to do.

Alternatively your friends could borrow personally and divert funds to you.

[Martymar93]

Hey Paul. Yes, I should have clarified. I am talking about a personal lender here, not banks guys. Now does that change my odds?

[nealrm]

By personal lender, are you talking about a friend, an investor, credit card.....

[Martymar93]

By personal lender, are you talking about a friend, an investor, credit card.....

Hey Neal! I'm talking about an investor.

[Owen]

Hey guys, so I am writing this in frustration. I always knew finding funding for a small business was going to be hard, but not this hard.

So I am curious to know what are my chances of getting approved for a 50-60k loan with two co signers who have credit scores of 650 and income of 25k a year? I am disabled and make 10k a year.

Thank you in advance guys. Also my credit score is bad but I recently paid all debt off IN FULL. My bills took a hit during my period of obtaining disability.

Thank you!
Not gonna happen. Banks do not loan people money with that low of income and that low of a credit score. Banks loan to companies with some sort of credit history and revenue history. If you want money with bad credit, low personal income, and no business history you are better off looking for angel investments from friends.

[Martymar93]

Not gonna happen. Banks do not loan people money with that low of income and that low of a credit score. Banks loan to companies with some sort of credit history and revenue history. If you want money with bad credit, low personal income, and no business history you are better off looking for angel investments from friends.

Lol. Since when was 650 a low credit score? Anyway, thanks. Any other opinions? Also we are talking about personal investors.

[Fulcrum]

Since when was 650 a low credit score?

Look at it this way, last time I checked my score was around 750 and I still get laughed at when I ask the bank for a simple overdraft; imagine what they'd do if I asked for a loan.

[Martymar93]

Look at it this way, last time I checked my score was around 750 and I still get laughed at when I ask the bank for a simple overdraft; imagine what they'd do if I asked for a loan. lol, well that's just plain mean. But what about personal investors, are they equally concerned with income and credit score?

[Owen]

Lol. Since when was 650 a low credit score?
I have a 740 credit score and I just applied for a $10,000 loan and I got approved with a 40% interest rate. 650 is low. As I said, a bank will sometimes ignore your personal score if your business is performing well. Banks don't like to give money when whether or not they're getting a return is incredibly uncertain. Banks don't seed invest (unless it's a government backed SBA loan but good luck getting one without a 750+ score)


lol, well that's just plain mean. But what about personal investors, are they equally concerned with income and credit score?
What do you mean by personal investors? Like your cousin or your friend? Usually, no. I've heard on venture capitalists running credit checks to see if you can handle money. Some care about income, $25,000 isn't going to cut it usually. Do you have any business experience? Do you have any collateral to back a loan?

[HumaneHosting]

I have a 740 credit score and I just applied for a $10,000 loan and I got approved with a 40% interest rate. 650 is low.


40% interest?? Might as well use a credit card and save some % off...

[Owen]

40% interest?? Might as well use a credit card and save some % off...
Didn't take it. Instead I max out my credit cards and spend money from my current job. It's all good, my credit limit is low enough where I can afford to pay it off with my current income.

[Paul]

lol, well that's just plain mean. But what about personal investors, are they equally concerned with income and credit score?

Much better chance with personal investors, especially if they're stoned!

But seriously, depends on the investor. If you can convince someone to invest then go for it. Get 5 or 6 people at $ 10,000 each. I doubt any institutional investors will bite, but you may find some locals that will. Just start pitching to family and friends, see what happens.

[Paul]

I have a 740 credit score and I just applied for a $10,000 loan and I got approved with a 40% interest rate.

40%, wow, isn't that usury in most states?

[HumaneHosting]

40%, wow, isn't that usury in most states?

Indeed it was very smart of him to use his credit cards instead of that crap loan. Even my mom's most expensive credit card is hardly near that at all.

[Owen]

40%, wow, isn't that usury in most states?
No clue. Got the loan in New Hampshire. I wasn't biting.


Indeed it was very smart of him to use his credit cards instead of that crap loan. Even my mom's most expensive credit card is hardly near that at all.
You don't even want to know my credit card interest rate

[HumaneHosting]

No clue. Got the loan in New Hampshire. I wasn't biting.


You don't even want to know my credit card interest rate

You can always switch cards if it really that bad assuming you kept your existing ones in good shape and making payments on time. Most of the cards I seen and even my mom have are between 20%-30% annual interest rate. So I am sure you may be able to score something better with that said.

[nealrm]

Investor are more interested in you than your credit score. Co-signer would likely not be required. They would want a ROI in the 15-20% range, min. More risk would mean a higher rate. It is also possible they would want part of your business as their share of the investment.

Is it possible for you to start small, and work toward a bigger store and skip the loan?

[HumaneHosting]

Is it possible for you to start small, and work toward a bigger store and skip the loan?

If it not then I would suggest him getting a much smaller loan if possible.

[Owen]

You can always switch cards if it really that bad assuming you kept your existing ones in good shape and making payments on time. Most of the cards I seen and even my mom have are between 20%-30% annual interest rate. So I am sure you may be able to score something better with that said.
I'm only 18 so I don't have much credit. I have a car loan (12k) that has a 24% interest rate. I'm in the process of getting it refinanced for a third of that. Got two cards that are Capital One secured and Discover student. Capital one is $300 with 24.99% and Discover is $500 with 22.99% APR. Capital One is about to turn into a regular card with a $2,000 limit in a month or two and the discover will eventually change.


If it not then I would suggest him getting a much smaller loan if possible.
If you don't have the credit they won't even give you personal loans. From what I've seen, a bank won't give out a loan until your score is at least 750. This obviously depends on the time of loan. Mortgages tend to hover around 650+, car loans you can usually get with 650+, etc. but SBA loans, business loans, and random personal loans want 750+. Other issue to consider is OP only makes $15k a year or $9 an hour if converted to exactly 30 hours a week. Unless the co signers make obscene amounts of money, a loan probably isn't possible.

[HumaneHosting]

I'm only 18 so I don't have much credit. I have a car loan (12k) that has a 24% interest rate. I'm in the process of getting it refinanced for a third of that. Got two cards that are Capital One secured and Discover student. Capital one is $300 with 24.99% and Discover is $500 with 22.99% APR. Capital One is about to turn into a regular card with a $2,000 limit in a month or two and the discover will eventually change.


That was similar to my card (and I still have it) but once they change it for you it should drop in % and possibly even become a rewards card to boost. Just remember to use it as much as possible and pay it off often. As when I dropped almost all of my limit's and paid it off that's when they upgraded my card.

[Owen]

That was similar to my card (and I still have it) but once they change it for you it should drop in % and possibly even become a rewards card to boost. Just remember to use it as much as possible and pay it off often. As when I dropped almost all of my limit's and paid it off that's when they upgraded my card.
I always pay off my card as soon as I get a due date. I'm starting a new job soon making salary, so I should have a lot more money.

[Business Attorney]

lol, well that's just plain mean. But what about personal investors, are they equally concerned with income and credit score?

Every private investor is different. All you can do is ask. Unfortunately, finding an investor to even pitch a loan to a business, particularly one that has the unique issues of a cannabis business, is the hard part.

I have heard that some people are having success finding financing through peer-to-peer lending sites like LendingClub.com but I have no personal experience with those. I suggest you check out one or more of those sites if you don't have potential lenders among your friends and family (which are always the best bet for a start up business).

[Phaladi]

i have raised most of my startup from online i can give you a link if you want, but you need to put some eforts in to it, any one is wellcome inbox me that link and we work together

[KOMPAR]

There are alternatives out there. Try to find a broker who work on a commission basis from the lender side, and they will do the work for you. I run such a business myself in Sweden, and we do most of the work for the borrower, who can simply sit back and wait for the offers to come in.

In general, my experience is that the credit score does make a difference, but that there are alternatives such as using your account receivables as a security for the financing.

[gfunding]

I have lenders that will use your co-signers credit scores in place of yours. I also have lenders that lend to the cannabis industry. If interested, you can contact me at: info@gleavesfunding.com