how do you build your company without credit?

Discussion in 'Business Operations' started by kodak mowing, Apr 18, 2011.

  1. kodak mowing

    kodak mowing LawnSite Member
    Messages: 140

    ok i have been looking at buying a newer truck,crew cab 4x4,a work truck but also a something i can drive to ball games and not hide it in back of the parking curent trucks are a 94 diesel ford f250 2x4,and a 95 f150 300 auto both regular cab.i often need to haul 2 or 3 guys to a big job and have to have both trucks at the job.a crew cab would save me $$$ in fuel in a year,but a 4x4 is a must for my driveway steep gravel.i do some foreclosed homes and mow residential and small commercial and do pretty good,but i dont have alot proof of income,because i have a lot of right offs and the bank goes by what you claim you made,and not the gross income.i have never been a big fan of credit ei mostly have never had it i pay cash for everything,at last check my credit was like 580 and i havent done must to help it,i have no credit cards and always keep cash in the bank for rainy days.ive been looking at a new truck around 10k 03 dodge 1500 4x4 crew with low miles one owner,very sharp truck.i dont have the that much funds in the bank becuase of the winter drain,yet to buy and i know it will be gone question is how do other fulltimers show there income?
  2. Raymond S.

    Raymond S. LawnSite Senior Member
    Messages: 996

    Pay me now or pay me later. You can't run a business at a loss year after year. Eventually you have to show a profit and pay taxes. When you do this you can begin to finance equipment/trucks to help grow like you want. I'm not saying it's a requirement to finance but it's also not as evil as some in here suggest. You'll find that many of the people who claim to have "paid cash for everything" and never finance are limited to the size of their business. Many businesses use financing to their advantage especially when maintaining cash flow.
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  3. Dr.NewEarth

    Dr.NewEarth LawnSite Bronze Member
    Messages: 1,476

    I go to the vehicle dealer and work out a payment deal with them.

    I've never used the bank for that. Too many hoops to jump through
  4. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Messages: 2,128

    if you want to grow without using credit, which is the way I operate, then you have to be prepared to make smart financial decisions and grow at a speed that your cash flow can support. It's that simple. If you really need to have a way to report your income then I would use my tax returns for the past two years. That's a pretty verifiable way to do it. You could go a step further and also pull bank statements to support the numbers on your return.
  5. kodak mowing

    kodak mowing LawnSite Member
    Messages: 140

    hey guy thanks for the great advice,yes a lots of hoops,using just bank statements would be great i would have no problems with that.
  6. vencops

    vencops LawnSite Bronze Member
    from NC
    Messages: 1,537

    I don't owe a cent (other than to myself) for any of my equipment.

    I'm trying to put my arms around how you can "do pretty good"........not show said "pretty good" on a financial statement....AND not have some said "pretty good" liquid that can be used for equipment (which a bus. vehicle could be). Where'd all the pretty good go?
  7. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Messages: 4,345

    Most banks with 1k or 2k down will do that loan if you don't have bad credit ( there is a difference between bad and no credit). Sit down with them, bring your taxes (they read between the lines example if you gross 100k even poorly ran 15k should be there, and they lock at where the writes offs are coming from).

    Build a relationship with the bank and when you need something again it will go easier.
    Posted via Mobile Device
  8. Stillwater

    Stillwater LawnSite Platinum Member
    Messages: 4,889

    This is a good reason to start tracking and documenting your income with profit and loss statements. If you don't currently do this, now is a good time to start in the mean time. Taking the last 2 years of bank statements that contain a clear record of deposit should be sufficient. If not then also include with those statements your past tax information with a cover letter attached with a clear explanation of your income that bridges the 2.

    This should be relatively easy, self employed people who truly and genuinely qualify for financing can show a clear record of deposit that exceeds the clear record of withdrawal. This still not good.... then you can pay an accountant to self audit you and include this info. This still not good then you don't want to be doing business with these people.
  9. WheatBookkeeping

    WheatBookkeeping LawnSite Member
    Messages: 108

    The short answer to your question, “. . . how do other fulltimers show there income?”, is:

    They, primarily, show income on their Income Statement, also known as a Profit and Loss Statement. The purpose of the statement is to show how much money was brought in and how much money was paid out for a given period of time. Supporting tax returns are also a good indication of your earnings and any tax obligations due.

    The long answer (which is more to your points) is:
    You want a lender to finance your truck purchase, so they are going to want to know why you need it. All the reasons you mentioned, i.e. haul your crew around, save fuel costs, 4x4 required to traverse terrain to the jobs, and increased reliability, are all good reasons. The lender should have no heartburn with your motives. By the way, no need to mention you gotta look good at the ball game - he already knows that.

    They may want to know who you plan to buy the truck from. They’ll want to know to whom you owe money to and how much. They’ll want to know who owes you money and how much. They’ll want to know your plan for repaying them. They’ll want to see your bank statements.

    They’ll want some background information on you personally and your business activities. Tell them about your clients, foreclosed home, residential, commercial and etc.

    Be ready to show the lender(s) your financial statements that have been derived from your company books. Lender(s) are impressed when you can show them up-to-date, well organized books that will easily depict your accounts payable, accounts receivable, cash flow and profits. They’ll want to see your assets so they can feel comfortable that you have the capacity to service additional debt.

    If your financial health is depicted clearly and accurately, and it is determined that you have enough income, you can be confident in the fact that you’ll get your loan.

    Good luck

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