|Posted by: matt Oct 13 2003, 10:03 PM
| I want to start my own business but I have bad credit.
1. I have $5,500 to start out with.
2. Will a bank accept a 5,500 5YR CD as collateral towards a $11,000 5YR term loan.
3. What type of loan would be better personal or business?
|Posted by: loanuniverse Oct 14 2003, 02:57 PM
This is a bit of a gray area for me. First, credit analysts never see a loan request this small. It just doesnít pay for the bank to have someone do a full analysis on anything under $250,000. The only time I remember working on something smaller than $50,000 was on my first banking job over seven years ago and the only reason was that the bank was small and they did not want to spend the money for a credit scoring system. Then again, my salary was much lower back then.
The second reason is that for a request such as this, where does the line for a business loan ends and where does the line for a personal loan begins?
I would like to say that a small business lender would be good enough to structure something for you, but this would be determined by how lucky you are with the lender that you find.
Having said that lets go over your questions.
Will a bank accept a 5,500 5YR CD as collateral towards a $11,000 5YR term loan? I can only say that they will be pleased to give you a loan for $5,500. You wonít even need a lender in most cases. The customer service representative will do it. Will they be willing to do it for $11,000? I donít know.... lots of variables here such as your credit, your income, your business etc.
What type of loan would be better personal or business? All loans have a purpose, and a good lender will ask you for the use of the money to determine the best structure. I just canít say on your case, you need to sit down with a lender and go over the options.
COMMENTS: ..... well more like questions that you will be asked or information you will need to provide so make certain you have something to show or know the answers. This is not a test where you will be graded, it is just that the process will move smoother with the information.
1 Do you have a business plan?
2 How is your personal credit?
3 Do you have a job? Do you intend to keep it?
4 Experience in the business you are starting?
5 Who owns the CD?
Sorry, I could not be of more help.