Should I or should I not get a business loan?

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NO SCAMMERS, PLEASE!!! If I wanted a loan, I would talk to a local bank… not you.

Anyhow, I am a computer technician. I drive within 100 miles of my home, and perform on-site installations of TVs, computers, display units, routers, dsl installs, telephone line extensions, diagnose and repair of computers, tvs, printers, cable runs… and many, many more.

I have years of experience, but mostly for myself. I have been working in the field for several months now. However, as being self employed and a 1099 contractor… work fluctuates. Sometimes I’ll get a lot of work, and be busy all week. Usually, without driving, this is 10-20 hours of work/week. Other times, its not so good. A couple of weeks ago, I worked 15 minutes. Fact is, I need more work or I’ll have to find a job. As of June 13th, I’ll be going to ITT Technical Institute, taking the Computer Networking Systems course, and I hope that that will help me find more work and also increase my skill level.

Now, I’ve had a lot of job offers (mostly working for McDonalds), in which requires tools and/or materials that I simply don’t have. Although I have a lot of tools, and am building slowly… I don’t have a lot of tools required to do a proper job. Thus, I have lost out on a lot of work.

I know the American dream is to get what you want now, and fast. And as I have no credit, a loan might do me good if I can make the payments. However, I am afraid that maybe something might happen and I would not be able to make the payments (such as my weekly work drops or something). Plus I do not know that much about loans other than that most banks I’ve seen want you to borrow a lot and a lot of money for a business loan. I don’t want to borrow $ 50,000 or more. I think doing so would be really bad as for one thing, thats more than enough to build my business and for another, payments would be too high and I might not even qualify for such a loan. I’m looking at $ 5,000-$ 10,000. Enough to buy more tools (ladder, butt set, network testers, tool bags, a new laptop, ipad (or other tablet… not sure yet), pay for some other things to advance my business such as background checks, drug tests, cisco network certification, some office equipment (laser printer, file cabinet, desk, organizers, etc), software, and that’s about it. In fact, $ 10,000 might be too much money and I’d be worried about me throwing way too much into my business, too fast, and not being able to handle the growth.

What are your thoughts as to whether I should or should not get a loan?? Do you have any tips that’ll help me decide? If I do get a loan, can I get a business loan that is as little as $ 5,000-$ 10,000? What is the approximate interest rate going to be and roughly how much will my payments be?

Lastly, I should point out that I am taking a 2 year college course, as I said, to get a degree in Computer Networking Systems. This is a $ 48,000 course and about $ 12,000 is being covered by grants. The rest is being paid for in state and federal loans, which I will need to pay back over a 10 year period, starting 6 months after I graduate from school. In some ways, I feel like I am already in debt, and shouldn’t take out another loan and thus get more in debt. But on the other hand, if I owe $ 36,000 (more after interest though), an extra $ 5,000-$ 10,000 seems like just a drop in the bucket.
Thank you for the help.

Please note, I made this question here in almost no time at all, and didn’t give much thought as to what I’d need. But from my work experience, I do know that I need a new laptop. Need. Having this older one with a battery that doesn’t hold a charge any more, plus it being slower… has really hurt my business. Having a ipad would be really nice as its smaller than a laptop and would save me paperwork, thus in turn saving me both time and money. However, its not absolutely required. And I do agree, I should try to save as much money as possible.

As far as whether the demands are there or not… they are, but I can’t go out and supply the demands unless I have all or most of the above, which requires a loan.

Another point worth making is that depending on how big of a loan I get, the interest rate, and how much time they give me to pay it back (I have no idea) I might not be able to make the payments until after I start picking up on this new work (which requ
As I said, I can get more work if I have the money to get the tools and other things needed to get the work. And I might very well be able to make the payments on such a loan IF the payments are low but as I said… I have no idea. I would assume I could. I guess maybe I should figure out how much I’ll need ONLY for what is absolutely necessary to build my business, and talk with a bank and/or check out small business loans to find out what the interest rates are and what payments will be.

2 Comments
  1. Reply
    P A
    June 27, 2011 at 5:14 pm

    >> However, I am afraid that maybe something might happen and I would not be able to make the payments
    >> Plus I do not know that much about loans

    Ok first of all, you sound like you’re going into this very naively.
    You talk about getting a business loan and then buying an ipad, sounds like a luxury to be buying that on credit if you ask me

    Remember the vast majority of small business fail within four years.

    The first thing you need to do is start your business, and you can do that with next to no money at all, despite what the supposed experts say.
    Lets say you start a business and you find out there is a REAL demand for what you;re offering, but you need more equipment to fulfill all your orders. At this point its worth looking at a loan.
    But dont just borrow a heap of money and then buy stuff like an ipad. Sit down and look at the items which, if you had, would generate more revenue.
    As much as I like my ipad, I cant see a £500 device helping a one man business.

    You cant compare bank or business loans to your student/college loan. The interest and terms are likely very different. All commercial lenders are sharks and if you cant pay them back, they will get very nasty indeed.

    Student loans are a bit more relaxed, and will give you a lower rate and longer time to sort yourself out.

    Finally, were still on the tail end of a recession. Many people still cant afford to spend money on anything that isnt essential, and its not a great time to be starting a business which relies on customers to pay your loans (but a great time to be starting a business with very low overheads!).

    Whatever you do, you need a formal business plan drafted, on how youre going to make money.
    hen once you’ve done that, start looking for government grants or small business loans on better terms than the banks offer.

  2. Reply
    Henry
    June 27, 2011 at 5:51 pm

    Any reputable lender will require a business plan that shows that you can pay the loan back. Go to http://sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html or http://www.score.org/template_gallery.html for instructions on how to write a business plan and sample business plans.

    Then, Go to http://www.score.org/mentors and enter your zip code. On the next screen, you will get information on the nearest SCORE chapter. Call them and arrange for a free meeting with a volunteer SCORE counselor. They will guide you through the process.

    SCORE is a nonprofit association dedicated to entrepreneur education and the formation, growth and success of small business nationwide and is a resource partner with the U.S. Small Business Administration (SBA).

    SCORE has 350 chapters in locations throughout the United States and its territories, with 13,000 volunteers nationwide. Both working and retired executives and business owners donate time and expertise as business counselors.

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