Loans?

Discussion in 'Starting a Lawn Care Business' started by GravelyWalker, Oct 10, 2012.

  1. EarthTurfSnow

    EarthTurfSnow LawnSite Member
    Posts: 17

    I wouldn't take a loan out just for a mower you should be able to save up enough money for a used ztr or something...loans to me just seem like a waste of money. But that's just my opinion.
     
  2. PerfectEarth

    PerfectEarth LawnSite Bronze Member
    Posts: 1,734

    LOL

    Don't listen to this.

    I've said it before, I'll say it again- intelligent equipment purchases that make your business money, and are financed at low rates, can save you SIGNIFICANT money come tax time (4 times a year for those of us who run legit...) while helping you grow.

    That's why business loans are available. Cash flow, people.
     
  3. GravelyWalker

    GravelyWalker LawnSite Member
    Posts: 86

    Seems pretty spilt 50/50. I know I am getting ahead of myself now that its going into winter and I wouldn't be buying anything until Jan/Feb. Guess I will just see how much I can save up before then, if I can get a good enough down payment it may be worth financing. Thanks for all the good advice
     


  4. THere's not a thing wrong with financing a mower, be smart and make it work for you.
     
  5. Pressedun

    Pressedun LawnSite Fanatic
    Posts: 40,786

    Couldn't have said it any better, must have that businessman mentality!
     
  6. WorldsStrongestLandscaper

    WorldsStrongestLandscaper LawnSite Member
    Posts: 243

    Yes. Agreed. Use the banks $ vs ur hard earned cash unless a sweet deal is upon u. Just be smart. Only take one or two loans not 5-6 at one shot. Make sure that piece of equipment will outlast the loan 3,4,5,6 years so it will still make u money after its pd off for a season or two then sell use for the down payment and buy another Build your credit to within great scores. Do not make late payments or default Good luck.
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  7. SRT8

    SRT8 LawnSite Bronze Member
    from CA
    Posts: 1,293

    Finance if you have to. You are losing money everyday that you work with equipment that doesnt cut it. $100 monthly payments to a business should be no problem just watch your spending.
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  8. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Posts: 2,132

    The most important reason we use credit is to insure the security of our cash flows. We have enough Capitol to pay cash for just about everything, but choose not to. We could close our doors tomorrow to any revenue source and our cash could carry us through a few months. We always make our payments on time, on smaller liabilities we pay the balance in full when the statement is received and on longer notes we pay more than the minimum and always pay off the balance in full atleast 25% faster than the payment schedule dictates.

    I am looking to buy another truck, in the $30k-35k range. I can pay cash, but do not want to lay that much out. My reasoning is I don't know what could happen next month. I don't want to risk having some emergency down the line were I need that extra cash were I may not have the time to get cash. If next year I have a record year, I can pay the loan off and save the money on interest.

    Here are the numbers for you: I can get a 4yr 3% apr loan. On a $35,000 loan, that adds up to about 2,000 in interest over the 4 yrs.

    Simply I would much rather pay that extra 2k in interest to have the cash security. Credit is a great business tool when used correctly. To many guys use it incorrectly and sign a note for a 40k truck and then hope they will find the work to pay for it. If you use credit wisely, pay your bills on time, then credit providers will want to work with you to get your business.

    A 5k mower at 5% apr for 4 years will add up to around $500 in accumulated interest. The question to ask your self; is it worth the extra $500 over 4 yrs? Chances are you will spend less time and money on repairs over an older mower, less down time, save money by having a more efficient machine, less wear and tear on your body, etc. If business takes off next year you can simply pay off the loan early and save on the interest. And as another said above, you may be able to get 0% if you have good credit.
     
  9. biodale

    biodale LawnSite Member
    Posts: 177

    Credit is a tool. Use it carefully and judicially and it can make you money. I will give an example of one of my purchases last year.

    I bought a Scag V-ride for $6500 @ 3.49% interest for 60 months. The interest is $226.85 for the year. I financed the whole thing. The interest is less than the annual cost of repairs for the machine I was using. I also got a 2 year warrantee with the new Scag. I paid the Scag off by the end of the year.
    I plan on doing the same thing this year with one of the new 48" Cheetahs. I just bought another totally enclosed trailer for my 2nd mow crew. I paid cash for the trailer because I was more efficient and profitable with the V-ride and made the money to do this
    .
    I started this business with my credit card because I had no money. I would not recommend that, but I had no choice and it worked for me. I now have a spray truck, sprinkler repair van, one mow crew with enclosed trailer and equipment, and a yard clean-up/landscrape crew. Everything is paid for except the 2008 Chevy Silverado bought 2 months ago. I also own a Sullair 185 cfm diesel compressor. Yep, its paid for.

    This is my 3rd year in business and I am grossing over $230,000. It is hard work but it can be done. Do not let yourself be scared away from success. Be committed, be smart, and work hard.
     
  10. KS_Grasscutter

    KS_Grasscutter LawnSite Gold Member
    Posts: 3,332

    Paying cash for everything sounds well and good. But personally, I leverage the hell out of every cent. I have more debt then I'm proud to admit to, but I haven't missed a payment so it must be working out. For example. Joe Lawn Care Guy brings in 3k a month mowing grass. Joe can bring in 6k a month if he buys a 60" zero turn to use on an account he was just offered. Joe waits to buy the mower, pays cash. Doesn't get the account obviously since he waited, then the transmission goes out in his truck and he can't fix it cuz he used his cash on his mower. Mark Lawn Care Owner financed a Walker Super B when he picked up the account Joe passed on. His transmission also went out. He paid cash to fix it, because he still had his cash in the bank, at the cost of .99 or 2.99 percent on the mower. Mark then buys out Joes business since Joe couldn't fix his truck. And since all storied have happy endings, Joe gets to mow the fancy uber high end office complex account, with a brand new 60 zero turn... Since he now works for Mark. Don't be Joe. Finance a mower, make money, pay it off.
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