Question I'm starting a plumbing company in northern VA that will do residential sewer and water, we will also do kitchen and bathroom remodeling along with service work, I need a start up capital of $250,000 my qeustion is how to aproach the bank for a small buiness loan and also are there any gov. grants that could help me? any advice ould be much appreiciated
Answer Dear ohnny O'Donnell:
For a project of $250,000 you will need:
1) at least $50,000 for down payment (20% of total project cost)
2) good credit history - 640+ (no tax liens or bankruptcies or late payments on mortgage)
3) experience as a plumber or/and as business owner/manager
4) collateral for the loan amount of $200,000
Collateral = (Real estate value*0.8 – Mortgage) + Equipment value *0.5 + Inventory *0.1
5) solid business plan with projections for two years.
Choosing the bank is a tricky part. Call a couple of your local banks (try small local banks first) and ask if they will finance a plumbing start-up. Apply with the bank who gave the positive answer.
Applying for a grant is not that simple. Check with your local authority. Some states have Entrepreneurial Development Programs. They might have small grants for rural area development.
Choose the grant you think is relevant to your project. Write and submit a proposal and wait for approval/rejection.
FYI: Despite common believe grants are not "free money". It is hard to get a grant. And after your business receives it you required to do regular reporting and comply with numerous government regulations. If the government learns that you are not using grant exactly as intended, or did not follow some regulations you will have to pay grant back with penalties.
