Contractor Talk - Professional Construction and Remodeling Forum banner

1 - 8 of 8 Posts

·
Registered
Joined
·
4 Posts
Discussion Starter #1
I have a general question on a business startup and how to provide cashflow for myself. Should I take a first mortgage out on my property to help pay the bills while the company is getting started and takes a few years to get off the ground? Or do I take a business loan and included in the loan is money I can take out in the form of a salary/wages? Thanks in advance.
 

·
Banned
Joined
·
14,078 Posts
If your question is what is easier - the home equity loan is going to be far easier to get then the business loan. A HELOC or home equity line of credit would be the way to go, then you can write checks out of it as you need them, say $10,000 to start, another $10,000 later, another $10,000 later. You qualify the loan for a higher dollar amount and only draw from it what you need.

Either way you do it it won't matter to the IRS for your companies taxes, set it up with your company as a personal loan from yourself on the books.
 

·
Registered
Joined
·
1,221 Posts
As Mike said, it's next to impossible to get a business startup loan- especially for a business with the high failure rate of construction companies. In order to get a $100,000 loan, you'd probably have to pledge $400k in equity to guarantee the loan. Of course, if you had $400k available to pledge, you wouldn't need the $100k loan, right? The old "they only lend money to people who don't need money" concept.... ;)

If you're going to do the home equity loan, do it before you quit your current job. The bank will want to see that you still have the ability to make the monthly payments. If you wait until you're on your own, they'll be less likely to fund the loan (though not impossible if there's still enough equity in the house even after the loan amount).

Bob
 

·
Flooring Guru
Joined
·
2,794 Posts


JK...thought I would add a couple of funny cents :)

this would work though :)
 

·
Registered
Joined
·
8,573 Posts
I started my company up with 100% of my money, and other than the credit card I use for every day purchases I have zero borrowed money. I intend to do it the old fashioned way and build my business.

I had $20k set aside of my own personal funds which I spent over a period of 5 months with a majority of it spent the first two months. This $20 was adequate enough for me to start up. I could have spent more easily, and if I had $100k I would have said the same thing, I could have spent more easily.
 

·
Registered
Joined
·
509 Posts
What the nature of the company.

Services companys you can start with a tool box, Brick and mortor companys need lot's, I started mine with a mini van and some tools.

There were many days that it was gas or eat, but no loans. I've been at it 3 years now, still no loans, I promised me self that if company was going to grow it was because I busted my ass, If sales are slow I get out there, not run to the bank. It would have been easyer with loans for start up, But to many people start companys and have to walk away from them and get a job to pay the loan.
 

·
Registered
Joined
·
199 Posts
Jake, it's great to see ya hanging in here and asking lots of questions. I wish a site like this had been around 30 plus years ago, would have saved me a lot of grief. You seem to have high goals so you should go far as you're willing to admit you don't know everything. Do join a Chamber of Commerce or like business group and don't be afraid to take a real estate person to lunch and pick their brains.
 
1 - 8 of 8 Posts
Top