Need Additional Capital

[KMEGIVERN]

Has anyone needed additional capital and found a source?

[Glowtanning530]

Credit Cards.
Good luck getting any kind of loan right now. Banks are TIGHT at this point.
I have a friend offered a 150k line of credit last year. He didn't need it so didn't take it. this year he needs it and they said nope.

[Glowtanning530]

This is only the beginning of the slow down I hope you have some money saved from busy season.

[Tanning Queen]

I have connections for loans but you have to have a good credit score. Some as low as 680 but more money for higher scores. Email me or PM me if you are interested.

[Ezliving_Jim]

I suggest getting a Home Equity Line of Credit. Interest may be Prime +0%. That's 5% today. On higher dollars, my bank will go Prime -0.25%

Stay away from merchant credit card advances. Borrowing from Paulie Walnuts would be better than that. At least Paulie tans!

[Glowtanning530]

IF your home has any equity.

[Island Cove]

sometimes, at least in canada, you can re-lease your equipment.

[Tanning Queen]

I DONT suggest using your home equity at all!!!!

Keep as much of your salon debt off of your personal report or you will start to kill your score.

If you are a corporation of any kind, there are plenty of ways to get funding with only a personal guarantee to the biz loan. If it is repaid according to the terms, it never shows up on your pesonal credit. If the salon doesnt pay, then they will request payment from the guarantor. If they pay it, then it still doesnt show up on the personal credit. If it is defaulted on, then it will.

I have lenders that will fund all kinds of amounts. There is one for $250k line of credit, no payments for 2 years, then a fixed 8% from then on. 750+ FICO score is needed. It can be also funded for lesser scores but with application fees.

THat is just an example of what you can do if you use your business to fund the salon. If you start using your personal credit like a house, it will drop your score and you will find it harder and harder to get funding.

[dsuriff]

Keep in mind a FICO score of 720 and up is great but if you use any of the fixed credit card loans with low interest it will be viewed very negative. I have a great Fico but due to funding some of my first salon with these low interest credit card loans my debt ratio to revovling credit is high and therefore I am considered high risk for a new loan.

I recomend using these credit card loans very carefully. Search for traditional lender or even research SBA's.

[Tanning Queen]

Dsuriff, not sure what you mean by credit card loans. Is that an advance on future credit card sales? Or do you mean the cash advance on your credit cards?

The loans I am talking about have nothing to do with credit cards. They are straight up lines of credits or flat term loans. If you have a seasoned business of 2 years old or more and a great FICO, you can get loans of $100-300k all day long and it never hits your personal credit report other than as an inquiry.

Newer businesses can get smaller loans and work their way up to the big money.

Keep as much of your business debt off of your personal credit as possible. DOnt use your personal credit cards to fund anything, if possible. If you ruin your personal credit, you are screwed to get business loans without a "credit partner".

There are ways to get the money you need but do it before you are so far in the hole that you are desparate. Easier to get money when you dont need it.

[sunsally]

I cannot stress this enough.................

BEFORE you open your salon - before you sign a property lease, before you buy equipment....

Make SURE you have enough money!!!!!!

ANY new business generally takes 1-2 years to really "hit the mark" and be profitable. SOME are faster - but assume the worst case and that yours will not be.

ANY tanning business generally is seasonal. SOME are not - but generally only after time or with superior salesmenship and a membership based pricing strategy. Assume the worst case and that YOURS will be seasonal.

Assume the build out will take longer and cost more than even the WORST you can imagine.

Assume it takes more advertising than you think.

I advise 6-12 months in working capital put aside. That means if your average monthly costs are 10K, you need 60-120K just laying around, waiting for you to tap it.

If they are 15K/mo - plan on more like 90-180K!

Squirrel away EVERY dollar you make in the first year! Don't go out to dinner, don't go out to lunch, don't buy expensive coffee drinks on the way to work everyday.

Do NOT use credit cards as part of your "start up expense". Save these for desparation, I-have-no-place-else-to-turn $$.

I see and hear too many of these kinds of stories over the years (not Highline leasees necessarily - I give them this lecture up front! ).

The bottom line - once you are open - finding sources of additional capital, if you can't show a profit (and if you can, you probably don't need the additional sources) - is darn near impossible.

Good luck - hope you find something.

[avalanche]

This is why you have to have a monster eft plan that will pay all the bills through the off season.
But oh no, everyone says it wont work or whatever and here they are saying there is no money.
Big eft pays the bills.

[Mojave Tan]

Originally Posted by avalanche

This is why you have to have a monster eft plan that will pay all the bills through the off season.
But oh no, everyone says it wont work or whatever and here they are saying there is no money.
Big eft pays the bills.

I agree. We really push EFT and it has kept us alive and with traffic too. = Lotion sales, accessories, upgrades. $ every day and rent & payroll covered by the 15th of the month.