Has anyone here received a business loan?

steeltoe1978

Here's the thing... there's a liquor license for sale in this county, and the price is about $250,000... and I WANT IT! Even the small hole-in-the-wall bars around here gross about $20,000 per week. I have an excellent credit history (pay everything on time and have no black marks) but I have a first mortgage and a home equity line of credit which I am using to fix up my house. This means that I already have 2 mortgages, but I want to get a business loan to buy the liquor license and start my own bar. I have no idea where to begin to go about obtaining the funds to buy this license. I believe that a bank may go for this idea after I show them research showing that the bars around here gross over a million a year, and after all, if I default on the loan payments the bank gets the license and can probably sell it for even more money. Where do I start?! Any advice is greatly appreciated. Thanks! [:)]

spryor

It may be worth your time to talk with the Small Business Administration, and get their perspective. They will even guarantee loans for business endeavors.

PJ

Rather than talking to the SBA directly (they make very few direct loans), find a local bank that is an "SBA Prefered Lender" and talk to them. You will be required to pledge all your assets.
Pete

DancesWithSheep

First off, if you haven't owned/run a similar establishment before, forget it--research is no substitute for experience. Second, hole-in-the-wall bars grossing a million a year? Where the hell do you live???

Frogbert

DWS has given you the very best of advice: FORGET IT!!!!

kristov

There must be a lot of thirsty people in your area of of Penn. for bars to be pulling down that kind of money: 1 million per year? Frankly I don't see much chance of any legitimate leanding institution loaning you $250K to purchase the liquor license (is an exisiting bar included in this price?). Having good credit is only going to help you if you have solid assets for collateral and it sounds like any equity in your house is already tied in loans with other lenders. I would ask the same questions that DWS asked: What experience do you have operating a bar or for that matter any other type of business? Bars are open LONG hours and you can't be there 24-7 so who are you going to hire to run the joint when you are catching 40 winks or taking a vacation? Cash businesses with valuable stock laying around like booze are an open invitation for insider rip offs from employees so keep that in mind. If you really want to go through with this you might check with the licensing authority to see if you can post a cash bond of 10-25% of the license cost and make installment payments over the period of say 18 months. A gross of $20K per week should allow you to pay off the balance within that time period. Your local bank might very well give you the $30,000 or so that you'd need for such a bond based on your good credit. Banks are in business to lend money, not to sell liquor licenses so they won't give a hoot about the potential value of that single piece of paper unless it is included in an existing business with assets which they can sieze and sell to recoup any losses. I'd advise you to forget the entire idea but then again plenty of people told me I was insane when I left a high paying job at a major engineering firm to start up my own engineering business. I proved them all wrong.

JesseLee

I am in the process of getting a SBA loan and let me tell you it is a major pain in the A__. First, check with the SBA to see if they will even guarantee a loan for that type of business. I personally do not think that they will but I could be wrong. If they will not then STOPunless you have a "angel/investors". You will be waisting your time. The SBA has alot of restrictions for their guarantee. They actually do not loan the money, they will only guarantee a percentage of the loan value. Typically it is up to 80%. Now if they will give a guarantee for liquor license, you will need to find a bank that will do the loan. PJ is correct find a Perfered SBA lender (it speeds up the pricess --- some). When you are looking for a bank make sure that you ave done your research before you approach the bank. You need to know the business inside and out. ? for you. Have you ever worked in this type of businss? If yes then that is one up for you. If not, STOP , your chance of finding a bank to approve your loan request is slim to none. The bank looks at several things, 1: what are you putting into the risk and how much? 2: Do you have experience in the business you wish to open up? 3: How is your credit history? being average will not get it for you. Credit needs to be perfect! 4: Are you willing to give everything up for/as collatoral and your right nut? The bank will want it. 5: Do you have a business model or plan. Without one you will not get a bank to even consider you as a commercial customer. This is some of the thing that you will need to know. Demographics, Marketing, Product knowledge (not from pouring beer down your gullet or power drinking, competition. You can do a search on line to business plans to get a better idea of what is needed and lastly plan on twice the time you expect and twice the investment you plan it will take. If you get past all of that then you are heading in the right direction.

Steeltoe1978: I know that this response seems to be abit disappointing but this is the reality of opening a business. I am not trying to discourage you from a possible "dream" but there is alot that you will need to do before being considered. Call the SBA or go to their web sight and check things out. Good Luck

lazerus

I am also beginning the process of applying for a SBA loan.
The process is a major pain and your only hope is to go with a company that will help you fill out the forms correctly.
over 90% of SBA loans are denied because the paperwork was improperly filled out.
Do not waste your time with big banks, go to small local banks.

GuvamintCheese

Stay out of the bar business!

SG

Wow, a small local bar doin 20k a week!? Here in Wi. "the land of bar's", every owner I know just barely makes it by and wouldnt be in business if it wasnt all they knew and been in the family for a gen. or two.I just cant see making that much a week unless you have a popular club that has live music every weekend and a nice dance floor.(outside military bases are the best). I think your best bet in getting an SBA for a bar would be to have a good backer. Know anyone with money that trusts your work ethic and capabilities? Dont really think a bank will touch it unless you have some pull in the bank. Goodluck in whatever your approach! just my 2 cents[:)]

select-fire

The liquor license is the least of your worries. What about the cost of the property and building of your new bar? Location and startup will kill you. Bad idea. Buy an existing bar if you have the fever.

ZERODIN

quote:Originally posted by select-fire
The liquor license is the least of your worries. What about the cost of the property and building of your new bar? Location and startup will kill you. Bad idea. Buy an existing bar if you have the fever.

Second. Existing bars are also much easier to sell to someone else if you can't make it work than half-built bars are.

steeltoe1978

quote:Originally posted by DancesWithSheep
First off, if you haven't owned/run a similar establishment before, forget it--research is no substitute for experience. Second, hole-in-the-wall bars grossing a million a year? Where the hell do you live???


On the "main line" outside of Philadelphia, PA.

steeltoe1978

quote:Originally posted by 46270
just a thought, are you a vet?



Yes... I was in the Coast Guard for 7 years. I don't know what benefits I can use from it since I am now out.

steeltoe1978

quote:Originally posted by ZERODIN
quote:Originally posted by select-fire
The liquor license is the least of your worries. What about the cost of the property and building of your new bar? Location and startup will kill you. Bad idea. Buy an existing bar if you have the fever.

Second. Existing bars are also much easier to sell to someone else if you can't make it work than half-built bars are.


I'll rent a space. The rent that most of the "smaller" bars around here are paying is about 3,000 to 4,000 per month.

steeltoe1978

Thank you all for the replies. I enjoy the honesty most of all. I have not been in the bar business, and I currently have a really good job with a major defense company. I understand how many of you may be concerned that I don't have any experience running a bar, but I do have the determination and drive necessary to learn what is involved. I also have several friends who are in the bar business who I would most likely hire as employees. The thing is that when I see something that I want, I tend to learn as much about it in order to get it. To give you an example, when I was 22 years old, I got tired of paying rent ($1100 a month for a tiny upstairs apartment) so I learned how to play the stock market and ended up buying a house later that year. Previous to that point in my life, I had never played the market, but I learned what to do and I was determined. When I reached my goal of getting a house, I stopped playing because my goal had been reached. I still invest, but in "safer" stocks than the ones I was buying at the time. I am by no means a rich snooty person, or I wouldn't be trying to get a loan to buy this license. [:D] Thanks again for the replies! I look forward to any more that you all post.