Equipement Financing HELP!

[KustomKoncepts]

Am I the only one who can't seem to get financing for a cnc Router???

I have been to several banks and they all say the same thing NO!!

I need about $30,000 for a cnc router. I am a 5 year old business with annual sales of $130,000.

I am only a one person shop with about $80,000 current debt.

My shop costs $63,000 annually.

I live off of $500.00 a month or $6,000 a year payroll. I have no home or, vehicle payments, medical problems, or dependents.

What is sending the bankers into a panic and run away from me?

I can try a leasing company they look at equipement differently than a bank but they rip you off so bad.

A 30K leased will cost me 42K in 5 years,
the interest lost to them is half of another cnc machine!!

What have you all done to get your equipement?

Thank you

[DRD]

Your in 80k in, and a high risk to the bank. The bank looks at if they give you 30k, and you don't pay them, what will they get for the machine if they have to sell it?
We just purchased a new Hass , we have perfect credit, have money in the bank, pull down alot of money ever year in sales, and the bank still wanted to see some money down. We put 20% and no questions asked period by the bank, loan was done. Bottom line is, the bank wants to see you comit to them, they will go along with you. Very rarely will the bank go 100% on the loan.
We could have got the loan with 0 down, But the bank wanted to see 5 years of taxe returns, and company profit and losses, so they wanted to dig deep, really deep. I was told by the guy that made our loan, that alot of loans on machines go into default, and the bank is at a loss.
Your 30k router is now worth 15k to the bank on the street, if you they have to sell it.

Good luck.

[KustomKoncepts]

I put up my $13,000 cd's as collarteral and I have $7,000 in roth iras at that bank but they won't use them as colateral.
I also have $3,000 in mutual funds.
that is 23K

should I cash out of this bank pay the penalties and put 20K toward my 28K router then I only have to come up with 8K more?

He asked me if he could put a lean on my business I also have a net worth of $70K but that is in a perfect world where they can sell all my stuff a a good price to get there money back.

a lease company does not ask to many questions. but it will cost me $8,600 in interest for my 28K lease to onw payments.

[307startup]

Kustom Koncepts

That's a tough one. I have a completely different philosophy in business, and it comes from one of my bosses who also happens to be the step-father of my ex-gf. Buy when you can afford it, work it til it breaks, never buy on credit. Ever. That way when times are tough, you can still make it through because you owe no one.

I have a car loan and a home loan. I'm working a second job to pay off the car as quickly as possible and pad my savings. My home loan will be paid off in 15 years instead of 30 because I make bi-monthly payments and drop my profit-sharing and tax returns into my principal.

I am starting a business and am purchasing all my equipment as I am able. I know that it's tough to realize that you could make a LOT more money with the equipment, but that's ONLY when times are good. When times get slow, that payment is a liability.

[KustomKoncepts]

yeah I know I really want this machine as I try to keep growing and diversifing.

I will be 28 years old in febuary, I should be much farther in life than I am, I started KK in college at age 20.

the last 5 years of doing this full time I have had a growth of 20% to 30% in sales and a 5% to 10% less in cost of goods sold.

but I seem to spend and add overhead that keeps me on a growth but also on the edge. I had $870 in the bank today with $5,600 in bills in 10 days. with $5,000 in recivables.

Gut check time, I kill myself but it is like alcoholism I run right on the edge. (I quit drinking 7years ago)

[cabnet636]

15 years ago. now we can get down to business

back soon cabnet

[KustomKoncepts]

Cabnet I think you know a little more about my situation and you also understand what real life is like for most of us.

No directed toward you WYLD but I would have to say that someone who says only buy stuff with cash and not on credit have the cash to do that in the first place!!!

there is a large steel supplier here 100,000 sq ft 150 employees strong, he says that everything was bought with cash, building, overhead cranes, semis, fork lifts ect.

so what he was a millionare before starting that so yeah he can pay cash for it all but how about the mass majority of us.

There is no chance with me being like that. I grew up in a trailer house and my parents are still in the same trailer after 25 years, My parents are blue colar workers, and I will never even have 30K laying in the bank cash to get this cnc.

People who where born rich or have inheritance can buy every thing straight up cash and never need a loan.

anyone who says money can't buy happiness has never been broke!

The economy looking at a resession isn't making my gut feel much better nor is it for my banker when the banks have taken a huge loss in the housing sector, that is also a reason I feel that the bank will not give me this loan.

[307startup]

Kustom Koncepts

I am an Army vet. I too was an alcoholic. Been sober now for 6 years, 3 months and 3 days. I know how that goes.

As for being rich, I am far from it. I managed to save $20,000 while in the army. I delivered pizzas at night when I could and used that for play money. The rest of my paycheck I put in savings & cds. Me and 5 buddies pooled our money, resources & talents to start a restaurant. It was tough going for the first six months, but between word of mouth and hard work we made it. I sold the majority of my interest in the restaurant (we now have 6) and earn a small, but steady income from that. I work as a machinist for a local shop. Well, technically, I am the shop. I have two lathes and a mill. They brought me on board because my ex's dad had enough confidence in my abilities to help them out. Now stuff that used to go out to other shops is handled in house. I make a decent living from that. My house cost me $78,500, purchased on a sub-prime loan. It has 1200 sq/ft with an attached garage. Far from pimpin or luxurious, but it suits my needs. I drive a 2004 Toyota Corolla. No rims. I live simply, but whenever I have a big enough chunk of money I buy equipment. My garage is nicer than my entire house.

I still deliver pizzas at night. Who can say no to an hourly wage and cash tips? I average $35 for 3 hrs in tips. Enough to live off of and have some pocket money. My day job pays the bills and the rest goes to savings or cds. I also attend night courses at the local community college on my own dime. I use my ACF/GI Bill to help support my hobbies.

I am 28 and have more than my parents. I hope to be able to help them out when they need it.

I understand what it's like. I just have to have patience and ride this out til I see my opportunity, just as I did with my restaurant.

I'm sure that you can too...

[cabnet636]

lease one major step in my growth, my edgebander yes i put 5000.00 down
on 24000.00 and interest on a lease is comparable. my only rule was this,
that my payment be manageable in the worst of times. sure i paid a little more. but the money that machine made us is far greater. self employment is a risk. like you i have been self employed all my working life. i do not reccomend it to anyone. i have survived all that has come my way reccessions or not. banks do not understand equipment nor what to do if somthing goes wrong. it does not surprise me that they wont play.

lease companies know where to market the machines if they have to take them back, they are not crooks just specialist in the equipment trade.
many of the agents i know surprise me with what they know about cnc.

i would also urge you to consider what you could do with a machine of less upfront involvement (used or new) i built my first verticle panel saw which i went to a trade show and stared at 45000.00 saw pining for it.. went home found linear bearings built me a carriage and off i went. build your own
cnc there are a lot of possibilitys.

now that i have owned acnc for two weeks i must say i am backing away from
the need for the extra spindle that i was so adamant about. bill has been so practical and has told me to wait and check machine before i go spending money. now that i am operating it setting z and bits just is not a big deal.

i can see alarger machine in my future and ultimatly this machine will play second fiddle however it will have paid for the other
you will get a machine. we will talk more about this call me tommorrow

jim mcgrew cabnet

[cabnet636]

it was 20 may 1993 at 5:30 pm, she was on her way out the door and hell was walking in behind her.







it became a great time to have my last drink

cabnet

[307startup]

it was 20 may 1993 at 5:30 pm, she was on her way out the door and hell was walking in behind her.







it became a great time to have my last drink

cabnet

What form did hell take?

[Denny J]

One other thing to look at is the amount of sales you have, whether you can meet your sales with your current equipment, and whether you need to hire more employees if you do not purchase the equipment.

For example, one employee making 10 dollars an hour costs you 400 a week just in wages. That does not count employment taxes,unemployment insurance,workers comp, etc.

So in a month you will pay that employee 1600 dollars plus the above costs.

Now, if you were to purchase the CNC and the software to operate it, can that machine plus you do more work than that employee plus you for the same money?

also, if you are turning away work because you cannot keep up, that is a situation where you may look at financing.

Here is what I suggest and what I am currently doing:

go to your areas small business development center and sit down with them. They will help you to write a business plan, develop a marketing strategy, and run some financial numbers to see whether your plan can cash flow at the levels you are projected to be selling. In my area they also offer gap financing and have some more programs tied to economic development that can provide more assistance based on projected job creation.

The business plan is the key. It will help you define what you want to do,how you plan to do it, and what you need to do it. If your plan is sound it will give you confidence and direction and it will show the lending agencies that you know your business and your direction.