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Gym/business questions

packrat

Super_Ideal_Rock
Joined
Dec 12, 2008
Messages
10,615
We've hit a stand still with the gym purchase. None of the banks in town will do a loan. The Small Business Association won't b/c they wanted the last three years worth of taxes/records from the current owner..the current owner has let it slide. Very lax records, and in some ways has run people away from the gym, so membership is low. My brother was told at first we could use the gym equipment as collateral and then was told no, you can't, you have to have some money. (even tho the equipment is worth 20,000 more than the loan would be for)

My thoughts are, we live in a small town. The exercise center in town that competes w/the gym-that's where all the business people go to see and be seen, they're all on the boards of each others businesses etc. Also, I wonder about the loan/business knowledge of a small town farming community where they mostly do farm land/houses, and the *rare* new business that comes to town. (and actually a couple of the new businesses in town are run by the families of the big businesses here..like the wives opening up their own shops etc)

I thought I would ask and see if there are other avenue's we could try that we don't know about. The only other thing we can think to do is take out personal loans.
 

D&T

Super_Ideal_Rock
Premium
Joined
Oct 27, 2008
Messages
12,504
shoot! the banking /financial industry is very very stringent now on business loans or any loans, DH works for a large financial institutions and does business loans analysis. He is having to go back to financial records that got certain business loans back in the days and now reaudit basically their previous financials that got their loan in the first place (the lax days of funding everyone and anyone) for any future loans request. Even for my company which is a solid company with virtually no debt, we just have a line of credit available to us at our disposal and the financial instution is now requesting crazy documents (even though we haven't even tapped into the line of credit! )and asking the wrong questions within our industry!. without solid financial and tax records, its going to be a tough uphill battle. How bout seller financing? otherwise high risk is using your own personal residence as collateral (I would really hesitate on this one) or like you say either personal loans or try to raise some funds outside of your partnership (interest bearing for enticement to give you a loan), or a venture capitalist group/firm, angel investor, but either way, you'll still be required to show some financial records and a solid business plan.
 

packrat

Super_Ideal_Rock
Joined
Dec 12, 2008
Messages
10,615
Thanks D&T! Yeah, once we learned he hadn't kept good records we knew there was going to be a problem. A prospector type guy came in a few months back, when we first got really going on it, and offered the current owner cash, but my brother is practically a son to the current owner so he's letting him/us have first shot at it. I don't think we'd have to have the full amount, the owner would let us pay part up front and then the rest monthly, like on contract..but we'd still need money to spruce it up and market the gym. I just hate to use personal funds right off the bat. They're coming over for supper tomorrow night so I'll mention those other things you suggested to them and see what we come up with. Thanks hon!
 

jstarfireb

Ideal_Rock
Joined
Mar 24, 2007
Messages
6,232
I'm pretty dumb financially, so I don't have any advice. But I wanted to ask what you decided on for a name...I guess I missed the resolution of that thread earlier!
 

packrat

Super_Ideal_Rock
Joined
Dec 12, 2008
Messages
10,615
Hey Jstar! There's been no resolution. He still wants My Gym but JD told him the other day that it's trademarked and the name of a bunch of cheesy little kids centers so it's out of the running. I still think Haven nailed it with Lift.
 

jstarfireb

Ideal_Rock
Joined
Mar 24, 2007
Messages
6,232
So do I! Hopefully he'll come around.
 

Octavia

Ideal_Rock
Joined
Oct 28, 2007
Messages
2,660
Totally not addressing your question because I don't know the answer, but are you planning to incorporate? If you haven't thought about it, you might want to -- I know I would personally never be involved in a potentially high-liability business like a gym unless it was a corporation. There are lots of considerations, of course, and it might not be right for you, but it's something to think about, especially prior to actually purchasing so everything ends up in the correct name. It would cost more upfront to incorporate, but IMO the limited liability could be well worth it. If you look into it, it might also impact the way the way the financing is handled, which could be good or bad...you'd want to check with a lawyer and/or CPA, I think. Anyway, just my $0.02.
 
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