Small Business Loans

**Baby Boy** · 05-05-06, 09:22 PM

I need some help with my math calculations on this one. I realize Spencer started an issue on this loan thing but I'm kind of worried though.

With the $1,000 --- I decided to take that and atleast get my business online paying for the $200 software, 2 years of SSL certificate and all of that... including maybe some temporary hosting... but I am thinking of using this company and getting a $10,000 loan (which will go towards inventory.)

Thinking of my profits is good, but thinking of how high the interest sort of is, worries will I even get most of that profit back and should I get slightly more then $10,000 ($15,000 or $20,000.)

Like every startup, I do NOT wanna fail this so I'm begging for some help to make sure I can find a good lender.

$10,000 paid back in 5 years is $165.00 a month --- with the interest being 8.99% --- I need to know, how much difference will that be. If my calculations are right, this should be $900 paid back, $15 an month added meaning $180 a month for 5 years.

Right or wrong?

GlobalWebDan · 05-06-06, 01:31 PM

Baby Boy,

Here are the stats for a 5-year, $10,000 loan, at 8.99% interest:

Monthly payment: $207.54
Total payments: $12,452.03
Total interest paid: $2,452.03

Hope that helps.

redrory · 05-06-06, 04:43 PM

Baby Boy, I am glad to see that you have decided to pursue your business venture with your money.
but..
Am I the only that see the problem of taking a loan of $10,000 !
I mean, start SMALL
Try and dropship to see if there is a market or if you can be successful.
A loan of $10,000 is a bit much
Maybe I am being a bit negative, but I cringe when I hear persons wanting LOANS to start online businesses.

anyone?

**Avix** · 05-06-06, 05:13 PM

I would suggest making the $1,000 go as far as you possibly can before getting a loan, then once you have had your business going a while you will be able to better judge how much you need, what for and if it is worth continuing.

Ideally you would be able to start getting a return from the $1,000 fairly early and not need a loan or atleast as smaller one.

As redrory said, I hate the idea of people borrowing large sums of money. It is quite risky, and the first few hundred of each months money goes to the bank.

GlobalWebDan · 05-07-06, 03:17 PM

There was an article by Norm Brodsky in the issue of Inc magazine that just came out regarding this. It talks about focusing on what your true goal is and then re-aligning your startup efforts around that true goal. You will more than likely find that you can startup with much less money than you originally intended to raise.

If you can get your hands on a copy of the article, I really recommend reading it.

**Baby Boy** · 05-07-06, 05:24 PM

Yeah, $10,000 is a bit steep but at the same time, the inventory isn't cheap. Its clothing and to think of how much it costs ($300-$600) for 12 pcs. of items, if I manage the $1,000 --- all I'll be able to get is maybe 2 items. What would my store look like starting with 2 items.

Now, think of it like this, a $300 wholesale for 12 pairs of jeans... retail for $60... $60*12 is $720, look at how much I am profiting.

Now, with $300 per wholesale items... lets say I use the full $10,000 on inventory, that'll be almost 33 items to open my store with, pricing (of course this won't happen) all items at $65.00 --- you do the math (12 pcs of each 33 items) --- ($65.00*396=$25,000) --- that's enough to pay the loan back and even further the business... with of course no debt.

Does anybody get what I'm saying?

mxer210 · 05-07-06, 06:32 PM

You could also try something along the lines of this instead of a full estore. As long as you have a niche, and that your niche is untapped or below equilibrium, you should have a successful venture.

You could also try http://prosper.com

**Baby Boy** · 05-07-06, 06:57 PM

Thanks Ryan, I'll keep that in mind. I'm thinking about maybe doing some website jobs in the future and getting into ShareBuilder for stock market trading and whatever. But where is some other good places to check into for the world of stock trading?

**Avix** · 05-08-06, 04:04 AM

If you are not opening a physical shop I don't think it is a good idea to keep stock to begin with. It might cost a bit more per item, but you could find a company to dropship or partner with a local shop.

I have worked with several high-street fashion shops moving into ecommerce, and the speed at which they have to turn over stock is incredible because of the changing seasons and trends.

Most of the sales clothing shops have are because of a stock screw ups where they couldnt get it off the shelves.

Some sell it all off on ebay at a loss because it is better than having it sitting on there shelves not selling.

**Baby Boy** · 05-08-06, 10:24 AM

^^ Typically true but you have to think of the ratio though. First off, its an E-Commerce business for now until I re-locate whenever I move. I'm hoping to move out of my parent's home before the end of the year to somewhere in Maryland (most likely Baltimore, not too far from my g/f) then I'll situate the whole brick-and-mortar issue.

At the same time, dropshipping is a problem, you CAN'T always trust somebody else with your stock, plus its just more work (if they are dropshipping for multiple companies, then that is even MORE work.) You can't always rely on a dropshipper.

And yes, stock DOES change, so thats why when the season changes, either sell it off on eBay as Avix said or discount it, but not TOO low below the wholesale price. Either way, you'll make a great profit.