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[MsEntrepreneur]

Hi! Good to be here...I am wanting to open a facility and all I can find is a distributor that wants to come in & do the whole feasability study. I don't need that but I need to purchase machines. Can I go around the distributor or do you suggest I use the firm to be sure all 'bases' are covered?

[laundryman79]

You are asking kind of a big question. Are you looking to buy an existing location, or build a new one? What part of the country are you in? Do you have business experience?

Not all distributors are bad. I looked around when I started to find one who would help me out as I searched around for a location. I figured I would need parts & equipment and would use them if they helped me out.

Try looking over the posts on these message boards and learn what you can. Try to be specific about what you are looking for.

[petefritz]

I think if you get your checkbook out and tell them just what you told us, they will take your money and sell you machines.

My question is why you do not need a feasability study, were they going to charge you for it, were you instailling an existing location ( make no sense unless they are trying to redo the equipment mix) or did you already have a few mats and prior experience and picked out your own location? Get all the info you can .

[MsEntrepreneur]

Thanks for the info...What I am looking to do is open a facility that would be new, built from the ground up. I am new to this market and really don't know where to start (other than here). I am looking for an SBA loan, grants, etc... I know that location is the most important aspect and I think I have found a good one. I am a young female in SC looking to be self employed, although I am not naive and new to business, I don't want to fall into a situation that could potentially hurt my endeavors. How long did it take (research to operation) for you to get your business going?

[laundryman79]

Since you are considering new, I would think it imperative to have a feasability study of some sort done, to include demographic research and pro-forma's. It really is more than just picking out some washers and dryers. If you are looking for an SBA loan they will required lots of this to support why they should loan you the money.

I started with existing locations, but it is really different with a new location.

[petefritz]

I do not know of any grants they give to start a laundromat. I have one now I am building in an enterprise zone, no grants. The SBA was interested, after I pledged a building I owned on the other side of town for colateral for the machines. I assume you have a decent amount of money saved up, say 200k, to be able to build from ground up and put in a laundromat. You will need that much cash just for the small things you can't get a loan for. I spent 3 years looking around, and I own other mats for almost 10 years. I still wanted the dealers opinion. I would have preffered to buy an old mat and remodel it, much easier to do that. Plan on the project taking a year or so after you buy the land. My nw project happened to be a laundy mat at one time, saving me $1000's in impact fees. I bought the building and am redoing the whole thing, still going to take about a year.

[Burley]

I agree with these guys. The distributor is trying to help gather information that you will need at some point in time. It is better to gather that information sooner rather than later. I have gone through the same process recently and am meeting with the bank today for my SBA loan. The difficult thing that you face is paying for demographics reports and layout blue prints at this early stage. It is especially hard because you should get this from 2-3 suppliers and you don't want to pay each one......but they have to cover their costs too.

If you are just trying to get pricing estimates, search this site for that information. You will find a lot that will help you.

[Duane]

As a member of the CLA, you can get 50% off demographic reports from www.claritis.com (http://www.claritis.com)

For an SBA loan you will need the follow, perhaps less, but probably more:

Business plan
Demographics report
Customer projection
Income statement
Lease agreement
Proforma
Number of customers per hour
Daily operation statement
Equipment list
Startup cost estimates
Floor plan
...........

Read all your loan papers and understand what you are signing.

Duane.

[Kari]

If you are considering an SBA loan make sure that you do it only if you HAVE to. We got an SBA loan. We were approved right away but it still took them 7 months to get the paperwork done. I was told that that was normal. Every time we turned around they were asking for more money for environmental tests and more time. We also spent thousands of extra dollars in fees. What is frustrating is that we found out to late that we had enough money to go through a regular bank. We had ben told that if you did not have about 50% of the money to put down then your only option was an SBA loan. That is not true. If you have no other choice then that is understandable. But I just want to warn you that it will take more money and lots more time. It cost us over a hundred thousand dollars by doing an SBA loan, between all the extra fees and the time spent waiting for everything to go through. We are in an area that is seasonal and of course the loan finally went through after the season was over. If you do decide to go SBA you should stay away from Goleta National Bank. They were horrible to do business with at least the reps here in Florida were.

[Duane]

Kari,

I believe you are right about which bank to use when getting an SBA loan. My bank quoted me the fees up front and said it would take 4-6 weeks. The fees were in line of a conventional loan, but the interest rate was 5% less that a conventional loan - well worth the extra time involved.

I have heard other horror stories about SBA loans, but the problems appear to be on the banks end. Check out your local banks and ask for quotes on fees and process time for the loan. Then see if they can give you a couple of local references so you can verify their process.

It sounds like your bad experience was with the bank itself. It is not uncommon for a loan processor to drag out a loan then start charging extra fees when they know the borrowers can not go anywhere else.

As for down payments, 30% will usually get you going on an SBA loan, but 50% is better for the success of your business.

Duane.

[petefritz]

maybe I got some different version of SBA backed loan. They had the money available within a month, I tried to delay a little becuase really did not need it yet. And I never gave any of the stuff Duane mentioned. and there were no huge fees or high rates. I used Capital One. The max loan was 150k just enough for my equipment. I plan to pay cash for the rest of of the buildout. Can't decide if I want a mortgage on the building or not, a banker keeps calling me to let him mortgage it, even wants to take me to lunch!