start-up or established? - Posted by AnnaSalk

Posted by Ed Garcia on December 20, 2000 at 17:51:40:


How are you? You have a terrific memory. You remember the alligator farm in Nevada do you? I’m impressed.

John you have to remember that the SBA is not a lender, but an insurer. So regardless of location, the underwriting criteria will be the same. If a lender wanted to do a deal outside of SBA guidelines, they would be on their own. You also don’t mention if either the borrower or her mother, are home owners.

To tell you the truth, when I first saw Anna’s post, I was trying to decide if I should leave it up because she was soliciting for an investor. Then after I decided to leave it, I saw it was about a business, and a cleaners at that. Once I saw it was a cleaners, your name immediately came to mind. There were several other posts for me to answer, and so I went after them.

John, you’re right, I should have tried to help Anna more than I did. I’m going to contact Anna, and have her call me.

Ed Garcia

start-up or established? - Posted by AnnaSalk

Posted by AnnaSalk on December 16, 2000 at 07:15:47:

A few days back I posted my dilemma and no one responded, not even Mr.Garcia for whom of course I have more respect than I could even describe. Is it possible that the reason people cannot help me is because the most attractive start-up is MUCH more difficult to finance than not-so-good but “established” business? Even when numbers show otherwise? If so, which would be the steps for locating a “partner in risk”? Is it still, in our time, that the local people (NY) would be the ONLY people to talk to? (Title of my previous post: “Business??”)

Re: start-up or established? - Posted by Ed Garcia

Posted by Ed Garcia on December 20, 2000 at 17:54:18:


If you would like to discuss your deal with me, feel free to call me at (909)-944-0199, and I would be happy to go over your deal with you.

Ed Garcia

Re: start-up or established? - Posted by will

Posted by will on December 17, 2000 at 24:59:10:

having a business paying for real estate is a great idea , i.e. McDonalds is among the largest single owners of land in the world and the franchises pay for it .

Re: start-up or established? - Posted by David Butler

Posted by David Butler on December 16, 2000 at 13:21:19:

Hello Anna,

I wanted to dive into to this because of a couple of the points you raised, and the impression it could give that might scare people away from pursuing their dreams. The point is, it is all relative.

The most attractive Start-up will often have a much better chance of flying, compared to a “not-so-good” but Established business. The comparison however, maybe part of the puzzle - inasmuch as the question begs another, i.e., “Most attractive start-up in comparison to what???”

When making investment decisions, astute financiers are usually looking hard at The Five P’s:

  • People
  • Proposal
  • Projections
  • Profits
  • Probability

Usually, when an investment is turned down, the answers to one or more of those Five P’s does not measure up.

So… you may need to take a very hard look at your Business Plan, and determine where the weaknesses are. Presumably, the folks who turned you down gave you the reasons they were not compelled to invest in your proposition. That is the obvious place to start. And if they didn’t - go back and ask them where the problems were… then do what you can to correct them.

That being said… it is worth understanding that small business financing is almost always an extremely difficult proposition at best - whether a start-up, or an established business. The one advantage an existing business will have however (provided it is doing well, or has a compelling argument to overcome a recent decline), is that it has a track record, that provides some ready-at-hand hard evidence to back the Five P’s.

Nevertheless, new small businesses sprout up everyday - in large part as a result of “F & F” financing (Friends and Family). To move beyond that, a person usually does have to have a very well put together business plan, and the plan has to provide some hard and clear answers to the Five P’s.

And, yes, even in our day and age, generally speaking, for most smaller businesses, and particularly a neighborhood business such as you describe, local investors are usually the dominant players. That really has nothing to do with day and age however… it is related purely to the nature of your particular investment… and more than anything else, the people factor that is so important in the equation for this type of investment.

I have no idea how far along you are in your Plan, but, if you haven’t done so, you might want to take advantage of the IRS’ FREE Small Business Resource Guide 2000. It is available on CD through the IRS website at - and offers an excellent and extensive Business Plan preparation kit.

Hope this helps, and remember… Professionals built the Titanic - Amateurs built the Ark. Never be afraid to try something new.

Merry Christmas!

David P. Butler

Re: start-up or established? - Posted by Ed Garcia

Posted by Ed Garcia on December 16, 2000 at 10:01:51:


I did see your post and was hoping that JohnBoy would answer it. JohnBoy currently owns a Dry Cleaners, and would be more than qualified to answer your question.

You see Anna; your deal is a business, and this forum is designed to talk real estate.
I assure you that no one was shunning you. To be honest with you, I should have taken your post down because you were soliciting for an investor, which is not allowed on this site, but I felt your question was honest and wanted to give JohnBoy an opportunity to answer it.

Ed Garcia

Thank you - Posted by AnnaSalk

Posted by AnnaSalk on December 21, 2000 at 06:22:21:

Thank you very much! I am thinking of revising my Business Plan with a CD I just ordered from and then follow JohnBoy’s instruction of trying to work with another bank and yet another… Then, if I still have no results, I will give you a call. Thank you again and have a very Merry Christmas. I always appreciate your thoughts of the day! I will surly be on line to read the next one!


Thank you - Posted by AnnaSalk

Posted by AnnaSalk on December 21, 2000 at 06:34:18:

I did look through the info you recommended. There is so much to study! I now have a very interesting homework to read during the holidays. You people are great! Thank you and Merry Christmas!

Re: start-up or established? - Posted by JohnBoy

Posted by JohnBoy on December 20, 2000 at 24:21:49:

Hi Ed,

I didn’t answer this post because I’ve already been working with Anna on this project. I’ve been helping her with getting her business plan together and giving her lots of information about cleaners. I’ve been leaning her towards SBA to get the financing on this. She had someone that was willing to partner with her by signing for the loan, but evidently this partner ran into another problem with a different partner of his causing him to back out of doing the deal with her.

Anna tried with one bank using her mother as a signor on the loan but the bank told her her mother’s credit wasn’t strong enough for a new start up. But isn’t that where SBA would normally fit in on something like this???

Ed, her mother lives in CA and the business would be in NJ. I know you have work deals in the past getting someone down with SBA and since Anna’s mother is willing to sign on the loan and lives in CA, I thought Anna should post something here to see if there was anything you could come up with or knew of any lenders that would consider their deal using SBA. I don’t know how much of an issue this would be with her mother being in CA and the business located in NJ?

I know she has put a lot of work into researching this project (even after I originally tried to discourage her from getting into this business since she has never been in it) and seems to have done an excellent job so far based on the information she has given me responding back and forth. Although, I haven’t seen her business plan first hand, so there could be some things that could use some fine tunning to spruce it up.

So I think what she is mainly looking for is where to find investors for a project of this type or if anyone would know of someone who could help her in getting the deal financed with a lender even if it’s through SBA.

Would it make a difference if there was a national lender that was in CA and had branches in NJ that did SBA Loans where she could use a lender in CA using her mother as the primary signor on the Loan for a business located in NJ?

I also explained that you can’t just quit because one bank turns a deal down. You gotta keep going to another bank until you find the one that eventually says yes! Along the way you learn off each bank from your experience dealing with them so you can better prepare yourself for the next one!

I’ve heard many stories in the past where guys where persistent and wouldn’t give up until they found a bank to approve them for what ever their deal was.

Anyhow, I figured if a guy could get someone financed for an alligator farm in a desert, then surely he could come up with some ideas to help someone get a cleaners financed in a prime location and getting the loan guaranteed through SBA to boot!!! :wink: