What are my chances of getting a loan?

[Jen]

Looking to get a business loan for a women's clothing store. Problem is, I have no money saved up. I do own a home and 3 cars. I have good credit score. I would need to quit my 9-5 job and my husband will be working to help pay bills at home. I would like to know what my chances of getting a loan since I have no money saved up? Will it be a problem getting appoved for a loan?

Thanks!

[Freelancier]

Probably. You'll have to secure the loan with an asset. Your store that doesn't exist yet is not it. Then you'll have to show how you're going to pay the loan back if the store fails.

On the other hand, go talk with the SBA, which offers help to female-owned businesses. Assuming you're in the USA, of course :)

[nealrm]

Given the high turn over on clothing stores, expect even a SBA backed loan to have a higher than normal rate. Think in the 8% range, with yearly adjustments. I will suggest another approach. I am assuming that the comment about your husband working indicates you are planning to live off his salary until to store generates a profit. So instead of getting a loan with no money, live the next year off your husband's salary while you continue to work. Put 100% of your salary towards saving for the business. This will let you know if you can truly live off your husbands salary and let you save for the business.

[Freelancier]

Put 100% of your salary towards saving for the business. This will let you know if you can truly live off your husbands salary and let you save for the business.

I change my answer to this one :)

[Harold Mansfield]

I would like to know what my chances of getting a loan since I have no money saved up? Will it be a problem getting appoved for a loan?
Thanks!

My first answer is always "slim". However, being that you own a home they'll probably what that as collateral if you have any equity in it.

I agree with saving 100% of what you are making now to see if you can truly make it. May as well ad the loan payment to those bills to see what happens if/when you don't start making money for a few months. If you can swing that on your husbands salary alone, then you may have a shot at not going under right out of the gate and losing the business and your home all at once.

[AccountantSalary]

You might want to check credit unions as opposed to banks for loans, especially ones that are based in your area. I've never gone to a credit union for a business loan but for personal loans, they seem to be more accommodating.

[Wozcreative]

I cannot say that I have experience getting loans.. but you could consider partnering up with someone who could get a loan?
Just make sure you aren't borrowing from family. For a store you will probably have to get an aweful lot of money for a store. I'd imagine rent for a store location would be abour 2-4K a month, then branding, website, marketing will set you at least 5K for something modest. Then you will need to set aside money for taxes, inventory, hydro, a debit/credit machine, insurances, shipping costs, possible machinery for steaming packed clothing, a % for stolen/lost/damaged products (women especially with their big purses and makeup staining clothes). These are only the things that I can think of, but for someone with nothing saved is a tall order.

I would suggest probably trying to do it out of your home first if possible.

[Pack-Secure]

If you do not have a good credit report or any credit report for your business, they will consider your personal rating. Having collateral and a good business plan will help.

[AlexB1]

As others have said you might have trouble getting a business loan right now since you do not have any business assets and have not been in business yet. Most banks want you to have been in business for at least two years before they will give you a loan (for their own risk protection), even with a personal guaranty. You could always try a peer-to-peer (personal loan) or consumer-to-business (business loan) platform.

[WilliamN]

Since you have not established yourself as a business it would be difficult for you to get a loan.
There are hard money lenders that would use your real estate as collateral assuming you have equity.
However their rates and fees are quite high.

You probably be best to get a loan against your real estate and use the funds to set up your business.
Then after a year assuming you have established cash flow you can then apply for a business loan and
payoff your real estate loan.

[Moonlight]

Hi!

For how long have you had your chlothing store?

[Blue Hen]

Bankers want to see borrowers contribute their own capital into a business. Why should they feel comfortable putting money into a startup that you yourself are putting nothing into?

I suggest saving up enough money to start the business without any outside funding and have enough left over to carry you through the first couple months if sales are slow. When you're ready to take things to the next level, then your chances of getting a business loan become possible.

Do not try to start a business with no money.

[Amir Khan]

Small business loans are harder than one might imagine. But good news for small business owners that microfinancing has arrived in U.S. I myself as a small business owner has received and benefited from microfinancing loan. My loan was from Accion Texas with very reasonable interest rates and reasonable underwriting and funding requirements.

I wrote a detailed article about getting microfinancing in United States called "Microfinancing for Small Business with 0% Interest". This talks in detail about additional microfinancing options for small business owners. Don't want to place links here, but please visit my site and learn more about it.

[broudie]

Any chance you can bootstrap your business i.e start small you wouldnt need a loan?

[phanio]

You will not get a business loan. No bank or small business lender will underwrite you a business loan without cash flow and collateral. But, you can get a personal loan or loans to cover your needs. First, outline what you need the funds for - i.e. rent, inventory, build out, equipment, marketing, working capital, etc. Determine the amount you need for each - then find ways to fund each one individually. You will find that, if you are bit creative and willing to work hard at it, that you can fund some of these without money (like working a non-cash deal with a landlord or leasing equipment) - then find ways to fund the rest.
Look into bootstrapping methods. This could include using the equity in your home, using personal credit cards, asking friends and family, peer-to-peer loans, using retirement funds or even getting personal loans and personal lines of credit from banks and credit unions. Just don't tell them that you are using those funds to start a business or they will try to switch you to their business products that you will not qualify for.
The goal is not to self-fund forever. But, use these methods until your business grows up enough to qualify for more traditional business financing - called taking baby steps until you can first walk and then run.