Expert: Marina Lando - 9/11/2003

Question
Hello,
I'm in the process of starting an internet cafe, and am in need of some advice. (I'm new to thins whole thing) I've calculated that I'll need about $30K to start it up, so I'll take out a line of credit for $50-60K (just in case). Do you have any advice, as far as taking out a loan? My brother seems to think that a formal buisness plan is needed, is that true? Is it better to have a location picked out first? Do I need to formulate the LLC before or after?
Thank you in advance for your help!
-Richard

Answer
Dear Richard:

Yes, you will need a business plan. It is ALWAYS good to have a business plan (first – you need it for yourself, second – to show it to the bank):
1)   It will show you what you want and how to get there
2)   It will show your competitors
3)   It will show how your operations will end –escape plan J

Yes, you must pick the location first, because it will affect your strategies (and business plan).

Loan.
You have a couple of options:
1)   If your credit score is 680+ - you can qualify for up to $50,000 unsecured start-up loan
2)   If your credit score is at least 560 – you can get home equity line of credit up to $5,000,000
3)   If your credit score is bad try Microloan. For more info go to: http://www.blquest.biz/microloan.htm
4)   Ask your local bank – probably they have some special programs for start-ups

You have to open company first before qualifying for business loan or credit line. For more info go to: http://www.blquest.biz/start_business.htm

I would not recommend to do business as LLC in your case. Open Corporation – it is safer. To read about different business structures go to: http://www.blquest.biz/serv02.htm

Sincerely,
Marina Lando
Commercial Loan Broker, CFC
888-469-1505
www.blquest.biz