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View Full Version : 600k loan for starting up educational facility



Amalashock
02-16-2011, 01:39 PM
Hello,

A friend and I are starting up an independent educational facility specializing in a specific trade. We are looking to purchase and renovate a building. The business plan is solid, and since its education based, we can adjust tuition to cover our expenses.

The trade we are specializing in is something that IS offered by two universities in the area. However, having been through one of those programs (and receiving my bachelor's), and my friend/partner being a resident/contracted teacher at the other university, both facilities are poor at best, and not up-to-date with industry standards.

We plan to offer a facility that not only the universities would be able to use, but is professionally designed and easily accessible to those who want to learn, not just necessarily someone who is in college going for a degree.

Revenue streams are endless from classes and retail of industry essentials, to celebrity clinics and freelance contracting/room rentals. For what people pay per credit hour at the university, we would be able to charge almost half of that and offer a better facility and overall education. Most importantly, people would be able to take classes to be trade certified, which in this particular field, is more valid than a bachelor's.

I have many questions about financing. How hard is it to get such a substantial loan? I own a car (which is 80% paid off) and bought a house 3 years ago. The money would be used for purchasing equipment and build-out. I have a high credit rating (680-710ish). Any help/questions/comments would be appreciated. Thanks.

PS - As you can tell, I'm not the most business savvy, but this is a chance for me and my partner to fulfill a big void in the midwest while doing what we love to do.


Andrew

Harold Mansfield
02-16-2011, 08:07 PM
Sounds like a nice idea that probably will be well received. Without knowing any particulars about your finances such as what kind of collateral you have such as any other property, stocks, bonds, or a co-signer with at least that much in assets...borrowing $600k with just an idea and a business plan s a stretch and doesn't normally happen that way.

However, you are in a particularly beneficial environment right now. Between stimulus funds and grants that have not been spent, and the President's push to fund better education as well as small business owners, I'll be willing to bet there is a program, loan or grant out there that is made just for you. More so now than any other time.

I can't be specific about one in particular, but given the current administration's agenda, that would be the first place I'd look. And if you do find something, spend the money to have a professional do the paperwork.

Steve B
02-17-2011, 07:40 AM
Hi Andrew,

Welcome to the forum. Is the trade/skill that you are teaching a secret? I'm curious what you are talking about.

You sound like a lot of people in the early stages of considering a new business venture. "I can do it way better at half the cost". I think everyone starts out this way, then you start finding out why other businesses charge what they do etc. I'd just be careful about having rose colored glasses. There are always hidden expenses and expenses you may not have thought of yet. Be careful and do as much research as you possibly can before approaching anyone for a loan.

Harold is correct, you may be perfectly situated to take advantage of the current economic and political climate.

Amalashock
02-17-2011, 02:17 PM
This would be a school specializing in the Recording Arts and Audio Production. The facilities (and *some faculty for that matter) at the University level in this region are very very poor, especially what they charge for tuition/credit hour. Preliminary numbers (if i get the money) show that tuition rates at the same level as the university would more than cover costs if we had just 10 students in two classes for a semester (4 months). We would need about 7k/mo. to keep the lights on. Revenue streams also include freelance contracting for approved engineers, audio equipment retail and accessories, in house engineering/production, and celebrity engineer clinics. We could also team up with those colleges and allow them to use our facilities if they would like as well as provide internships.

The universities also don't want to spend money upgrading facilities when the money can be better spent elsewhere - its all politics.

My partner, who teaches at one of the universities currently, has nowhere to send his students unless they want to hit the coasts. I feel this would satisfy a pretty high-demand niche in our area.

ruth
02-19-2011, 07:24 PM
Will your school be accredited and what impact will it have on your being able to obtain the loan?

phanio
02-21-2011, 09:49 AM
Couple of suggestions:

First, if you have retirement accounts (accounts that can be rolled over like IRAs, 401(k)s, SEPs, Keoghs, etc) you can direct those funds be invested in your business. This is not a loan so you don't have to worry about credit, collateral, payments, interest, etc. Then, when your business takes off, you can put those funds back - just like your account manager would do - invest in businesses, then sell off those shares to put the funds back.

If you don't have enough to cover the $600K - then you can use those funds for a down payment.

Second, if the business you are starting is to acquire real estate and equipment, you might look into some of the SBA guarantee loan programs - their 504 program might work for you. Know that these are hard to get but are one of the few options you have for that amount of money.

Lastly, you can always get out in your community and network for local investors or other business owners who would be willing to back you in this venture. Many local business owners (even doctors, lawyers, cpas, etc) like to give back to their communities and this just might offer them a great way to do so.

Harold Mansfield
02-22-2011, 03:44 PM
You may also tap hardware and software companies in the industry. I know, for instance, that Pioneer, Ableton, and Tractor team up with audio production schools and seminars such as Dubspot: Dubspot | DJ School NYC, Ableton Online Courses, Electronic Music Production (http://www.dubspot.com/).
Not sure what the extent of the collaboration is, but if you are teaching specific software and hardware courses, maybe the companies will donate some things to ease the cost of having to purchase everything.