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General Category => Going Pro => Topic started by: jhartje on June 26, 2015, 11:37:34 AM

Title: Start up funds?
Post by: jhartje on June 26, 2015, 11:37:34 AM
I have been looking at starting a home brew supply store.  This is something that I was planning more long term to get the funds to start up.  The issue is the local shop is going out of business and selling for a good price and I don't have the funds yet to buy it.  So the first place I looked was an SBA loan but my bank told me that I would need to take at lease $100,000 loan and that is far more than I need.  Does any know of any other ways I could acquire the funds to purchase this business?
Title: Re: Start up funds?
Post by: dkfick on June 26, 2015, 11:53:35 AM
I think I saw a how to video on this called Breaking Bad.
Title: Re: Start up funds?
Post by: majorvices on June 26, 2015, 12:42:38 PM
I have been banking with a small local bank to run my business. Started with an 80,000 loan and now I just took out a $500,000 loan. If you find a small bank that is local-business friendly they may be willing to work with you, assuming your credit is good and you have some money to put down.
Title: Re: Start up funds?
Post by: denny on June 26, 2015, 03:29:08 PM
I think I saw a how to video on this called Breaking Bad.

 ;D
Title: Re: Start up funds?
Post by: Joe Sr. on June 26, 2015, 03:33:42 PM
BS.  The SBA has a micro loan program, max amount of $50,000.

My computer has been freaky lately, so I can't cut and paste and I'm too lazy to type the URL because you can just google SBA loans.

Look for a CDFI fund lender in your area, they will likely be a good conduit for these loans.  Again, Google CDFI lenders.  LISC and Enterprise are two national organizations that have CDFI lending operations, there are probably local entities near you as well.  CDFI = Community Development Financial Institution.  Their rates are not as good as you will get from a commercial bank, but they make loans that those banks won't.

Another option would be to check out your local municipality.  They probably have small business loans and grants that they make available.  Is there a chamber of commerce you can contact?  Or a local development corp?  If so, they would be great resources for you to explore.
Title: Re: Start up funds?
Post by: Jimmy K on June 26, 2015, 03:34:58 PM
Maybe you already know the answer, but my first question would be why is the local shop going out of business. Is it successful? Or are they failing? If they are failing, be really sure that you could you do better.
 
Otherwise, talk to other banks. I can't imagine that a bank would tell you a 'minimum loan amount'.
Title: Re: Start up funds?
Post by: curtism1234 on June 26, 2015, 03:53:38 PM
Maybe you already know the answer, but my first question would be why is the local shop going out of business. Is it successful? Or are they failing? If they are failing, be really sure that you could you do better.
 
Otherwise, talk to other banks. I can't imagine that a bank would tell you a 'minimum loan amount'.

Talk to other banks. I work in a commercial lending office and there are employees who dick people around and not want to do anything below $x

As to why it failed, that is certainly a concern. Location may be a problem. However selection/low overhead might have been a problem - there's a place here in St. Louis that I can't figure out how it's still open because they NEVER have anything in stock.

The big thing right now is to have beer and wine making classing in the back of the brew store. I suspect it has higher margins than selling people 10 pounds of 2 row. Maybe look into that and see if it makes sense for you.

Good luck
Title: Re: Start up funds?
Post by: jhartje on June 26, 2015, 10:42:20 PM
Thank you for all your advise.  I am looking into other banks as I did see other loan options on the SBA's website that my bank was not able to offer for some reason.  They do offer the $50,000 but told me they cannot offer that as an option for business acquisition only to improve an existing business.  As far as the failing of the business I have considered this and done my research and reviewed their P&L' s for the last 5years.  As it is you could say it makes money as it is not run as a business but a hobby.  It is only open 30 hours a week if they decide to stay open during their posted hours.  They make most of their profit from the sale of wine they make to local businesses.  And that is why the business is for sale they can not distribute any longer because the new owner's husband works for a distribution company and the state will not allow them to renew their license as they consider it a conflict of interest between the 2 businesses.
Title: Re: Start up funds?
Post by: narcout on June 27, 2015, 12:02:11 AM
Does any know of any other ways I could acquire the funds to purchase this business?

Maybe ask the seller if they are willing to take a note for part of the purchase price (fully amortizing or perhaps interest only with a balloon payment)?
Title: Re: Start up funds?
Post by: curtism1234 on June 29, 2015, 08:35:00 PM
Thank you for all your advise.  I am looking into other banks as I did see other loan options on the SBA's website that my bank was not able to offer for some reason.  They do offer the $50,000 but told me they cannot offer that as an option for business acquisition only to improve an existing business.  As far as the failing of the business I have considered this and done my research and reviewed their P&L' s for the last 5years.  As it is you could say it makes money as it is not run as a business but a hobby.  It is only open 30 hours a week if they decide to stay open during their posted hours.  They make most of their profit from the sale of wine they make to local businesses.  And that is why the business is for sale they can not distribute any longer because the new owner's husband works for a distribution company and the state will not allow them to renew their license as they consider it a conflict of interest between the 2 businesses.

If you end up buying it, do yourself a favor and immediately rename the business
Title: Re: Start up funds?
Post by: Thirsty_Monk on June 30, 2015, 12:15:12 AM

Thank you for all your advise.  I am looking into other banks as I did see other loan options on the SBA's website that my bank was not able to offer for some reason.  They do offer the $50,000 but told me they cannot offer that as an option for business acquisition only to improve an existing business.  As far as the failing of the business I have considered this and done my research and reviewed their P&L' s for the last 5years.  As it is you could say it makes money as it is not run as a business but a hobby.  It is only open 30 hours a week if they decide to stay open during their posted hours.  They make most of their profit from the sale of wine they make to local businesses.  And that is why the business is for sale they can not distribute any longer because the new owner's husband works for a distribution company and the state will not allow them to renew their license as they consider it a conflict of interest between the 2 businesses.

If you end up buying it, do yourself a favor and immediately rename the business

This is correct. Otherwise you carry all the previous owner liabilities. You can just change it from "homebrew shop co" to "homebrew shop LLC". Good luck.
Title: Re: Start up funds?
Post by: thirsty on July 06, 2015, 03:09:45 PM
This guy just took over my local shop. It's probably a longshot, but you could email him and ask for details.

http://brewitstore.com