anyone gotten a loan based on a contract

[bigshow825]

it might be a silly question but has anyone ever got a loan and showed a contract as proof of income or large income or watever? im needing some equipment like a bp blower and another trimmer and a 36 wb, i just won a contract that is going to bring in some good revenue and wondered if the bank would make a small loan based on that along with my credit and other accounts, or income. also the bank is where i have my business checking at.

[DLAWNS]

I would think that if you have good credit, they would give you a small loan based on that. However with the economy, banks are a little skiddish about handing out money. So I don't know if it will help but it certainly couldn't hurt to bring the contract to the bank with you when applying for the loan.

[Scagguy]

Show the bank your contract along with the last 2 years of your operating statements and your tax returns. As long as you have decent credit and not looking for long repayment terms, I'd say your chances are very good.

[Oldtimer]

A contract for work not performed yet isn't worth much as collateral for a loan.

If you are paying taxes and running your business like a business the chances of getting a loan for a large percentage of the mower are good. The loan will based on your credit history.

Oldtimer

[Green Finger]

No to your question.

You can only get a loan base on credit.


There are companies out there that will give you money if you have a govt contract. It's called factoring. They give you a percent of your accounts receivables of that contract.

But when you bill the gov, the payment goes to the company first.Then you get any proceeds if any.

I wouldn't do it.

[bigshow825]

hey guy' s thank you for responding with helpfull infomation

[mjealey]

I work for a bank and I will be honest with you. If you don't have really good credit and been established for 2 full years don't bother. Your best bet would go with the Yard Card or some kind of dealer financing. When I bought my Z 4 months ago they had 12 months same as cash. There is a $50.00 fee and that is it. I just paid mine off and it only cost me $50.00. HERE IS THE CATCH: If you don't pay it off in 12 months they will apply all the interest for the past 12 months. $6500 x 21.99% = $1430 of interest they will hit you with at the end of the 12 months.

Going back to business loans. That is something that banks have seen high losses in a an even higher rate than foreclosures. Yes it is for a business, but they are going to look at the owner of the business and want to see his credit as well as the businesses for the past 2 years. You also better have a credit score of 730 and have debt to income less than 50%. Even at that the rates really aren't all that good. N0 banks want to finance a start-up business right now. Especially, in the lawn and landscape business because the turnover is so great, banks view them in the same categories as realtors. If you are a bigger operation you might be able to use a property or building as collateral but can't be the same as residence. Business Flexline are a revolving line of credit that businesses can get based on financials and credit. They are usually unsecured and a big risk for a bank with rates anywhere from 8 - 15%. Not what you are looking for. Bottom line is if you are looking to get financed, see what the dealer has to offer. I heard through a buddy of mine that Better Outdoor Products is pretty easy to get financing through and there WB's are as good as anything out there. Call them and see what they can do.

[Tadams]

I have used Sheffield for 2 mowers and GE Money bank for the last one. All 3 were through a dealer. They usually will use the mower as collateral and also based on your credit score. GE had a 6 month no interst so it's a pretty good deal.

[bigshow825]

that's realy good information. thank you very much. i could get by with what i have but yaw know as well as i do that a bp blower will save aot of time, time= money.

[Mow Right]

that's realy good information. thank you very much. i could get by with what i have but yaw know as well as i do that a bp blower will save aot of time, time= money.

Are you under 18?

[Team-Green L&L]

You'll need to speak with a Venture Capitalist to get a loan based upon receivables.

[bigshow825]

Mow Right, I just turned the ripe old age of 29. and i'll check out that venture capiltlist or watever its called, its so freakn awesome how so many people give advice, stories, and very much needed help on here, thanks to everyone. all yaw keep on keeping on.

[FordLawnLandscape]

Your correct . This is one of just a very few Internet forums where everyone seems so helpful, nice, considerate, and just friendly. Sometimes the truth can be harsh sounding , but before u get offended just remeber , mesgs through typing, or texting alot of times can be interpreted the wrong way. Neways, good luck w/ your loan that you are seeking to get. Hopefully you'll be succesful in getting it and be able to buy the equipment you need. So many times if you just can get just a little "boost" outta the starting blocks , it can be a start to a really good think :)

[zimmatic]

Yep, You can get a bank loan based on your contract/recivables. However, you should have a good relationship with your banker. What is hard to find is a banker that is at a bank for any extended period of time, and is willing to see you grow. Plus it never hurts to have 20% down. Credit is also very important.
It helps if you go into the bank and talk to your banker at least every 1X or 2X's a month. It does several things, one, you gain a relationship and they get to know your business. I know I will get some flack on this next idea, It will get harder for the banker to say NO to you or they will try harder to get the loans you may need.
These are all things that are working for me. Not all have the same experince.

[HOOLIE]

I'll echo the guy that said he's a banker...banks almost always go off past performance...that means what you have already earned, and your credit which of course, reflects your recent history. Also the part about being in business for 2 years. Gotta have that to have any chance. The banks also are not stupid...they realize this is a seasonal business for most of us and there's considerably higher risk with our type of business. They want to be sure you can pay them back 12 months of the year rather than 9.

Your best bet might be with a small, local bank. A friend of mine is a florist...she went thru some terrible times, has awful credit, a recent bankruptcy, but banks at this local, one-branch bank. They actually give her short term loans to cover her slow periods. You'll never get that from a Suntrust or Wachovia.

If anyone finds a good venture capitalist, let me know :)

[Mow Right]

Mow Right, I just turned the ripe old age of 29. and i'll check out that venture capiltlist or watever its called, its so freakn awesome how so many people give advice, stories, and very much needed help on here, thanks to everyone. all yaw keep on keeping on.

Cool, I was just checking. I agree with what the others said, banks give loans based on at least 2 past years of tax forms.

I've never heard of a bank giving a loan on a contract, which is merely a sale projection. But you might get lucky since you need less than $10,000 (I'm assuming). At my bank I can get up to 10,000 on an unsecured loan (w/o collateral).

[MSS Mow]

Cool, I was just checking. I agree with what the others said, banks give loans based on at least 2 past years of tax forms.

I've never heard of a bank giving a loan on a contract, which is merely a sale projection. But you might get lucky since you need less than $10,000 (I'm assuming). At my bank I can get up to 10,000 on an unsecured loan (w/o collateral).

I have heard of it. In fact, it's fairly common, especially on larger contracts.
A contract is much more than an over-inflated sales projection. A contract provides a guarantee of income, not just some hopeful numbers from sales projections.

Obviously banks still take into consideration past performance, credit history, etc, but if you bring in a shiny new contract showing some new work that will more than cover the equipment that you want to borrow for, the bank is more than happy to extend credit.

Perhaps I'm just lucky I have such a good relationship with my banker. I called him on the phone a couple months ago while out of town and wanted $15000 grand for a 2nd truck (for snowplowing). He said no problem, just write a check for it and I'll deposit the funds in your checking account. Just stop in on your way home and sign the paperwork. I had a contract to show for it, but he didn't even ask. Just stop in and sign on the dotted line. That's what a clean history of paying on time will get you, plus living in a small remote community and having gone to school with my banker. I'm only 28 too.

[zimmatic]

MSS Mow,
I would have to agree with you on what a small bank or personable banker can do your you. I won a 3 year govt contract worth 275k I need some more equipment. My banker said bring in the signed contract, sign the paperwork and go buy the equipment. I would never have been able to do that at my local wells fargo bank.

[Mow Right]

Well I guess I was unaware that banks would do this. I'll have to keep that in mind. Do you think they will gives loans with multiple smaller contracts?

Personally, if I was a bank, I wouldn't want to give somebody a loan based on a big contract (unless it was the gov't). Because if somebody buys 5 new ZTRs to mow one account with (for instance HOA), and then the account gets mad and quites. The loaner might owe more than what they are worth.

I suppose it depends on the contract too, in my contracts I give the customer a way out... I guess you wouldn't do this on a big contract.

[mjealey]

Here is how some of the larger banks compare to smaller banks. Sad to say, but if you have a banker that works in a large bank, here in the south some of the larger banks are SunTrust, Regions, First Tennessee, Wachovia, BB&T etc... it really doesn't matter if you and you're banker are absolutely best friends, they have no say if you are approved or not. They have what is called decentralized lending. Your banker is going to gather all the necessary information that is required to enter the information in the computer which is sent to the banks home office or leding center (Birminham, Al or Atlanta, GA etc...) where there are underwriters that look at the loan and the numbers. Those underwriters could care less about anything besides the bottom line numbers (credit score, income to debt ratio, 2 year tax returns, nature of business). They don't care if your best friend banker owes you a favor or anything. Sad to say, but in most bigger banks your banker has little say or decision making on whether you are approved or not. He can only control what he puts in the computer to make you look as best as possible. Some of the advantages of bigger banks are more resources and products, if you're very strong financially lower rates, and more flexiblity on repayment optiions.

Here's how smaller banks differ a lot. There are smaller banks here i the East Tennessee area that have only one office or a couple. They are small banks. In this situation it does really depend who you know to a certain extent. They get all the necessary inforation about you, and they look at it right there at the branch with the manager or even the president of the bank who has an office right there. Yes, i do know there are some banks that will lend money on a hand shake like the old days. One bank I know of here, if someone applies for a mortgage, the board of the bank actually sits down and decides if they are able to do it or not. Completely different than the big banks. If you know you're banker and you have done a loan with him before and paid it, than it really is pretty easy to get a loan.


Bottom Line: The way banks lend is completely different now. If you are some one with average credit 660 - 700 you will be better off going to a smaller bank or credit union. If you have good credit 730+ than a larger bank might be better for you. Keep in mind you always need to make sure that you have debt to income of 45% OR LESS. Right now, I seriously doubt ANYBODY will lend based on a contract. Have to have 2 year tax returns!!! Then pray you haven't written off to much so it looks like your business has a lot less income than it really does!!! I hope this helped some people if anybody has any questions please feel free to ask.

[MSS Mow]

Here is how some of the larger banks compare to smaller banks. Sad to say, but if you have a banker that works in a large bank, here in the south some of the larger banks are SunTrust, Regions, First Tennessee, Wachovia, BB&T etc... it really doesn't matter if you and you're banker are absolutely best friends, they have no say if you are approved or not. They have what is called decentralized lending. Your banker is going to gather all the necessary information that is required to enter the information in the computer which is sent to the banks home office or leding center (Birminham, Al or Atlanta, GA etc...) where there are underwriters that look at the loan and the numbers. Those underwriters could care less about anything besides the bottom line numbers (credit score, income to debt ratio, 2 year tax returns, nature of business). They don't care if your best friend banker owes you a favor or anything. Sad to say, but in most bigger banks your banker has little say or decision making on whether you are approved or not. He can only control what he puts in the computer to make you look as best as possible. Some of the advantages of bigger banks are more resources and products, if you're very strong financially lower rates, and more flexiblity on repayment optiions.

Here's how smaller banks differ a lot. There are smaller banks here i the East Tennessee area that have only one office or a couple. They are small banks. In this situation it does really depend who you know to a certain extent. They get all the necessary inforation about you, and they look at it right there at the branch with the manager or even the president of the bank who has an office right there. Yes, i do know there are some banks that will lend money on a hand shake like the old days. One bank I know of here, if someone applies for a mortgage, the board of the bank actually sits down and decides if they are able to do it or not. Completely different than the big banks. If you know you're banker and you have done a loan with him before and paid it, than it really is pretty easy to get a loan.


Bottom Line: The way banks lend is completely different now. If you are some one with average credit 660 - 700 you will be better off going to a smaller bank or credit union. If you have good credit 730+ than a larger bank might be better for you. Keep in mind you always need to make sure that you have debt to income of 45% OR LESS. Right now, I seriously doubt ANYBODY will lend based on a contract. Have to have 2 year tax returns!!! Then pray you haven't written off to much so it looks like your business has a lot less income than it really does!!! I hope this helped some people if anybody has any questions please feel free to ask.

All very well put. Your point about writing too much off and showing you have little income can come back to bite you when applying for a loan. Most don't think about this aspect. My accountant reminded of this last year, as I was looking to buy a new place and would be needing a mortgage.


Some banks will still lend based off contracts, but you'll find it's the small town banks that have always lent money this way and in fact thrive off the "little guy". "You scratch my back, I'll scratch yours" mentality. It's a win-win for both the business and the bank.

[lifetree]

You'll need to speak with a Venture Capitalist to get a loan based upon receivables.

That's not what venture capitalists do, they finance new technology development, etc. !!

[Mow Right]

Bottom Line: The way banks lend is completely different now. If you are some one with average credit 660 - 700 you will be better off going to a smaller bank or credit union. If you have good credit 730+ than a larger bank might be better for you. Keep in mind you always need to make sure that you have debt to income of 45% OR LESS. Right now, I seriously doubt ANYBODY will lend based on a contract. Have to have 2 year tax returns!!! Then pray you haven't written off to much so it looks like your business has a lot less income than it really does!!! I hope this helped some people if anybody has any questions please feel free to ask.

Thanks so much for all of this information.

When I bought my last truck (the 06 F250), I financed a little under half of it so I could still have some money to get through winter. I went to a local credit union and the lady gave me the loan without even seeing a financial statement, although she did want my tax forms for her records.

When the lady asked me how much money I made, I told her "I had gross sales of xxxx". She did not ask my net luckily. On paper, I didn't really make anything because I do everything possible to make my taxes low (obviously).

If I went to a big bank they might not have given me the loan, I'm not sure. My credit scores are the in the 71X area. Even though I don't have much income to show, I think that is probably not too bad of a score and I was only financing $8000 on a truck that booked for $23,000.


That is my only experience taking out a loan.

[mjealey]

The fact you were only financing $8,000.00 on a $23,000.00 truck really helps. If something happens in the next year and you decide not to pay, the credit union knows that they can turn around and cover themselves. Most of the time, not always, it does seem like credit unions are easier on their underwriting. To be honest, I work at a bank, but if I need financing I go to a little credit union in here in the Knoxville area.

[Mow Right]

The fact you were only financing $8,000.00 on a $23,000.00 truck really helps. If something happens in the next year and you decide not to pay, the credit union knows that they can turn around and cover themselves. Most of the time, not always, it does seem like credit unions are easier on their underwriting. To be honest, I work at a bank, but if I need financing I go to a little credit union in here in the Knoxville area.

That's funny. I have a friend that is a manager of a local Chase branch. He also does the same thing.

[silentroo]

Actually Venture capitalist do buy accounts receivables all the time. I sell many of my winter monthly contracts for cash. They do not need to be government just good and reputable companies. Often Venture capitalist love to find a place to put cash for 2-3 months that has a return higher than the 2-3 % they are getting from the bank.

I know three to four guys nationwide who do it. It can be cheaper than a loan if you know the right guy and need the money for supplies that will be consumed (SALT) if you are paying bills and buying equipment it may be a little higher.