Any Small Business Owners Out There? Advice Appreciated

[Heroesandvillains]

I have an abundance of questions, but I think I'll start with the most urgent: financing.

My current employer is offering me a buyout option effective the first of the year. Through negotiations, it's come to light that he has a business partner, effective though March 31, that would need a financial buyout to make this happen.

Long story short, yesterday, my boss and I shook hands on an agreement where I would pay him $6,000 by December 31, with $4000 more pending on the final day of February.

The final installment I'm not worried about. The business generates between $50,000 and $70,000 annually, so $4,000 on the back end should be manageable. But the initial $6,000?

It was more than I had expected.

Another business owner/friend I know is willing to invest $2,000 (with minimal interest and flexible payments), but ideally I'd like to lock up the other $4,000 soon without having to empty out my savings account (not that I even have that much anyway).

Does anyone know of any reasonable and reputable (if they're online) lenders that I can reach out to? I don't have much time, so small business grant avenues may be a little unrealistic to get in this short window of time. Or maybe I'm wrong so I'm all ears!

Just to note: I'm currently an independent contractor and my boss is going to 1099 me at the end of the year, so I'm concerned I'll have some issues demonstrating my income. My parents will almost definitely co-sign with me though. I just wanted to point this out so anyone willing to point me in a direction had all of the facts.

Like I said, I have a bunch of questions but this seems like a good place as any to start. Any suggestions would be invaluable.

[Fresh Tendrils]

Re: Any Small Business Owners Out There? Advice Appreciated

Do you have a CPA or know of anybody that can recommend one to you? That would be a good place to start as far as new business and your options go.

As far as the 1099 goes - just know that you will have to pay self-employment taxes on that income when you file your return next year.

[Bullit]

Re: Any Small Business Owners Out There? Advice Appreciated

One thing I would advise to is to check with local and state government on the possibility of a small business loans. They have some great rates and are a good way to get a start.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

Thanks for the replies!

Here's the deal:

I called my local credit union where I currently have a personal loan that I took out essentially to build my credit score (which is impeccable, by the way). I tried to see if I could extend that amount between an additional $3,000-$5,000 and the second it looked like it was gonna happen, the girl obviously heard from her supervisor that since its intended purpose was for business, that they mandated I speak to the business loans department.

The business loans representative said I'd need to provide the business' YTD income, my most recent tax return and my current YTD income. The last two I expected, but it's November! My boss hasn't prepared all of this information yet. This will take time and we are currently in our busiest season!

So I said to the business loans representative that this seemed like way too much hassle for such a small loan.

She paused, and then agreed with me. Now she's referring my loan back to the unsecured personal loans department to see if they'll take it.

Originally, they wanted my Federal Business ID and a business bank account but I told them it would be stupid for me to file these things with the Secretary of State and the IRS (and pay for the filing) if I couldn't get the loan. I am not currently an owner of this business!

Still waiting for a return call. This was almost 4 hours ago.

Business loans seem far too complicated for such a small amount. I really only need $3,000.

Wouldn't a personal loan make more sense here? Am I way of base on that?

I know an accountant, yes. But I want to keep my out of pocket cost down. I was hoping to wait to see him until the beginning of 2014 to help me with my current 1099.

Man, this is stressful. LOL!

[ImTellinTim]

Re: Any Small Business Owners Out There? Advice Appreciated

If it's only $3,000 and you have good credit, I'm really surprised they're giving you such a hassle. Just do a personal loan if you're willing to take that risk.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

If it's only $3,000 and you have good credit, I'm really surprised they're giving you such a hassle. Just do a personal loan if you're willing to take that risk.

I agree.

Anyone that knows me here on OS knows that I'm a pretty mellow guy. But this crap from my current bank really has me fuming.

When they said, "What's the purpose of the loan?" all I would have had to say was "car repair" or "honeymoon" and this would've been over with. Today (provided they didn't need my pay-stub/s...but that should be easy for my boss to get me).

But I want this to be on the up and up; and I am no liar so I didn't go there.

I just called them again; voicemail!

I'm so tempted to just hit up a national bank and be done with this garbage! Sorry for my tone, by the way. But this "business plan", "business YTD" ,"federal business ID" crap really has me angry.

Any suggestions for any websites or national banks I can hit up?

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

If it's only $3,000 and you have good credit, I'm really surprised they're giving you such a hassle. Just do a personal loan if you're willing to take that risk.

But remember, at least in my state, they ask you what the purpose of the loan is. Once I said "business," things got messy.

What would you say if you were me?

[Fresh Tendrils]

Re: Any Small Business Owners Out There? Advice Appreciated

Its not really a business loan, though, as you're not borrowing against any business capital. Plus, you don't own the business. Did you tell them that you were using it to buy out your boss? To me that is more of a personal investment than a business loan. I'm no banker/loan manager so I may be way off base.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

Its not really a business loan, though, as you're not borrowing against any business capital. Plus, you don't own the business. Did you tell them that you were using it to buy out your boss? To me that is more of a personal investment than a business loan. I'm no banker/loan manager so I may be way off base.

I was very clear, which is why I was floored when the original girl I talked to asked for a business bank account (after clearly having been corrected by her supervisor for which department I needed).

I told her again I didn't own the business and refused to file with the state and federal resources to establish that without the loan being guaranteed.

This is when she transferred me to the business loans department and all hell broke loose. I'm supposed to be getting a call back on whether or not the personal loans department will take my application.

Like 5 hours ago now.

[Fresh Tendrils]

Re: Any Small Business Owners Out There? Advice Appreciated

That's interesting considering you're personally using it to buy a business and not buy something for the business.

Is the business not incorporated or licensed? Your boss should have an FEIN though obviously the bank account information will be off limits to you.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

That's interesting considering you're personally using it to buy a business and not buy something for the business.

Is the business not incorporated or licensed? Your boss should have an FEIN though obviously the bank account information will be off limits to you.

He is incorporated. An s-corp.

But I'm not buying the business, I'm buying out one of his locations.

I'm going to establish myself as a sole proprietor initially and incorporate myself only if my revenue exceeds $50,000 and I hope to expand.

I feel like I shouldn't have to supply this information on my boss' income to them. He owns other businesses under the same entity and it would be a real headache for him to break this down for me now in paper form. He's doing that when tax season comes, not on Black Friday weekend. LOL!

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

Sweet!

After I called them a third time, she finally answered.

She has assured me that the personal consumer loans department will take my application and that it won't be kicked back to the business side. Nice!

Fingers crossed guys. I should hear back tomorrow and fill out the initial application.

In case this goes sideways, I'd still love some suggestions for reputable banks to try if I get turned down.

An easy and hassle free one would be nice.

[Fresh Tendrils]

Re: Any Small Business Owners Out There? Advice Appreciated

Since it'll be on your tax return as a Schedule C and since you won't be incorporating the business yet I don't see why they wouldn't do either of them (business versus personal). The hassle over 3k is weird and you would think they would know how to handle this situation.

[ImTellinTim]

Re: Any Small Business Owners Out There? Advice Appreciated

If I were you, I'd incorporate immediately. If the business goes under and you don't, creditors can and will come after your personal assets. I don't think there is any downside to incorporating, and there are ways to do it on the cheap.

Mind if I ask what kind of business you're getting into?

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

If I were you, I'd incorporate immediately. If the business goes under and you don't, creditors can and will come after your personal assets. I don't think there is any downside to incorporating, and there are ways to do it on the cheap.

Mind if I ask what kind of business you're getting into?

My boss thinks I should incorporate too for that very reason. However, I believe filing would probably cost me around $125 (just to register). Maybe more. An accountant in NY state (my bosses uncle), I live in VT by the way, said incorporating there is something like $1,000 in total (don't quote me on that).

If you know of ways to do it cheaply, please let me know.

The business is cell phone accessories. Mostly covers/cases/screen protectors/etc. Currently there's no e-commerce going on either. I plan on becoming an online presence too, as well as look into pre paid phones and phone buying and selling.

There's a lot of room for growth.

My insurance should be dirt cheap (around $40 or less monthly). All of my in store sales will be subject to 7% retail sales tax.