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Where did you get your business loan?

Tjmcnich

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Well I just applied for my first business loan from Wells Fargo and they want 50-60% Down. On a 1.5 million loan thats a little excessive. Are there good small business loan companies out there? Is it even possible to get a Loan for that amount with 10-20% Down? My wife and I have excellent credit and very little debt other than our house which has equity of about 150k

Thanks!
 

tdlconceptsllc

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Priviate lenders but normally they would want the property as collateral and it would have to be worth way more than 1.5 as it sits for them to just have there money tied up like that. Wells Fargo is the last bank I would ever want to do business with. You will have a better chance with a small local bank but borrowing that kind of money would at least require 20-30% down or more. good luck
 

Car_Wash_Guy

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Wells Fargo...and let me tell you. It wasn't a walk in the park. I put 30% cash down, and then collateralized one of income producing properties against it.

I had excellent-perfect credit. ZERO personal debt. $Millions in assets. They still broke my balls.
 

wash4me

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small local bank. There are brokers that find financing for a percentage of the loan. I have never done that but have heard good things.
 

Tjmcnich

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Yeah I know this is going to be a headache. My finances are make 100k Salary with the Fire Department, I own an Online e-commerce biz that does 120k a year in profit. Wife is a lawyer but doesn't make typical lawyer money only around 60k. We owe 290k on our home thats worth around 430-450k. I have zero debt she only has student loans. Both cars are paid off and we have 100k saved up so far. I thought about getting the property via mortgage and then get the actual car wash (700k) as a construction loan. Make sense?
 
Etowah

Roz

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and you want to be in the car wash business because....

If you are profiting $120K from an online business perhaps you are better off with less headaches, less debt, and putting more time and resources into your online biz? You are going to work a lot harder to make $120K. Maybe you are pursuing the wrong idea? Not being negative but you seem to have a few good things going.

If set on car wash industry and loans are challenging or too expensive then perhaps you should look at an existing car wash for sale with good numbers that you can take to a bank? You are new to the industry and looking to build a new car wash without experience in the industry - while not rocket science I can see how a bank would want to make a loan expensive and challenging. An existing business with numbers backed by tax returns is a much easier sell to a loan officer.

Last alternative is a hard money loan, but interest rates will make the bank rates look like peanuts and they may insist that the title for the property be in their name until the loan is paid off (risky unless you have a good agreement)...
 

Tjmcnich

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Thanks for the reply Roz. I like to spread my eggs into many different baskets is the only real reason I want to do this. There aren't many physical businesses that require no employees either which is also reason I really like this venture. (I'm going 2-Bay Touchless where my distributor does just about everything) The online business is great but I doubt will be long term so I milk it as much as I can.
 

Roz

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I hear you, no employees is a definite benefit until I want to take a vacation. Have a good short list of people you can trust to pitch hit for you if you like to take a true vacation. Good luck.
 

boywonder

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Turn and run away as fast as you can. There is always a need for an employee, and your distributor will never be available when you need them. In simple terms you wont make any money. Seen way to many washes go down with that attitude.
 

robert roman

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Equity required to obtain a loan to acquire real estate and build a carwash facility is a function of the risks in the venture. Besides land development and investment ownership risks are business operating risks.

For example, will the site generate sufficient gross sales? Some of this was discussed on another thread. Can adequate staff and management be provided to ensure an efficient and customer-centric operation?

To paraphrase, 20 percent of success is equipment, 80 percent how you treat customers. This “personality” is the goodwill created. Without prior carwash ownership and management experience, how do you plan to mitigate risks?

For example, you can hire an engineering firm to conduct EPA Phase I to ensure that any previous use of land has not resulted in toxic contamination. However, what are you going to do if the labor (20 to 30 hours per week) needed to maintain this site doesn’t show up, walks off, gets hurt or sick or worse. After all, this is a 24-hour a day, 7-days a week, rain or shine carwash.

Considering the circumstances you described, I’m surprised the bank would be interested. They are but at 50 percent down. What this says is the loan officer believes the risks in this venture are considerably greater compared to what they are in a traditional or conventional project.

7a might be more attractive but expect big fees.
 

BBE

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It's TOUGH to get a loan that size for a carwash...and even tougher when you have no prior experience in the industry. Banks hate carwashes, and they hate the idea of financing one to someone who's never been in the industry even more. Personally I think your best option is going to be to try and find a small local bank who would have some interest in the property itself should you not make it.
 

soapy

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My first car wash loan was through a small bank using the SBA. I already owned the land. At the time SBA an extra 10K in fees but they did loan 90%. I had to do a construction loan then long term with the SBA.
 

BBE

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If all you want to do is diversify your portfolio....there are WAY easier and more profitable options out there then building a carwash. I would encourage you to explore other options. I heard a story one time that a room full of wal mart corporate big wigs were being pitched a carwash idea, it was a lengthy presentation, with the start up costs, equipment, soft costs, etc.. all broken down, avg ticket price, expenses, the works. And finally the bottom line number was circled and pointed out to the room, there was a moment of silence as everyone was taking it in, no one wanted to be the first to say yay or nay. And then one of the big wigs stood up and said "Or, we could just find a way to increase the profit margin on our t shirt sales by 5 cents and make double that." And that was the end of that.

My point is that building a carwash just to diversify your already nice portfolio is more often than not a recipe for disaster, and that there are many easier, and less risky ways to achieve that.
 

JMMUSTANG

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I’m surprised they are loaning you any money.
1.5 million $ for a 2 bay IBA wash?
Considering bad weather days your wash would have to be VERY busy to pay that off.
Just look at the weather in this nation the last 2-3 weeks. Most of us are, if open, hardly doing any business or are mostly closed waiting for the weather to warm up so that we can fix our washes and wash cars.
When in warms up a bit then we have to work our asses off fixing anything that froze or broke to get open.
You’re distributor will eventually fix your stuff but at what cost and time.
Even if you’re the first wash he comes to help fix he won’t have the same insentive as you to fix everything as quickly as you would.
Plus he’ll probably get there at 8-9 a.m. and leave at 4-5 p.m.
Most of us will start a lot earlier than that and stay A LOT later to fix everything as quickly as possible.
This is not an easy business.
Good luck
 

Tjmcnich

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How many employees do you think I would need for a 2 Bay Touchless Carwash? My distributor said Zero Employees which is what made this so attractive. Also, any breakdown before 4pm is guaranteed same day service (besides on major holdiays) and anything after 4pm is serviced the next morning. With Washworld products and prevent maintenance I wouldn't expect these to go down very often and hopefully not at the same time. Also, the distributor and I both get real time mobile updates on anything that's malfunctioning with the carwash as well as real time data's (number of washes per day etc) So we won't need to reply on a customer calling about a broken down system we would know right as it happens.
 

BBE

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you know a distributor is ~$90 an hour plus service call fee, and even more on weekends right? That's before the cost of the parts :)
 

Tjmcnich

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I just drove past a car wash at 6:10am with the temp outside of 4 degree's. 9 cars were in line at the Gas Station Automatic Car Wash (1 Bay). You gotta understand the Chicago Market. My location would see 30-40k cars drive past everyday. Even in the middle of the night its still a very very heavily traveled street. If my loan payments were 10k a month. I would need to see 1 car every 30 minutes to break even. I also have zero competition on the street im looking to buy on. No car wash within at least 8 miles south and no car wash north of me within 15 miles.
 

boywonder

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Car washes are not turnkey operated. They need labor. Equipment hardly ever breaks down between 9-5. Usually 5 oclock on friday, or holidays. Equipment distributors tell you what you want to hear to make the sale. Once they get their money, they don't give a crap about you. Just because you have mobile monitoring doesn't mean your going to know everything. You might know your market, but most of us know the business, and everyone commenting to you combined has most likely more than 100 years experience. The best thing for my car wash is the absentee owner of other washes. None of us on here really care whether you spend your money or not, but we'll be there to buy it from the bank for pennies when it goes belly up. When you say there is no car wash within x miles, I would be asking the question why? Now if you did build and were successful, I guarantee there will be 3 more built within a stones throw of you. Were all giving you our experience and opinions for free, take it or don't but I wouldn't do it. Oh and I would not do a loan with Wells Fargo, even if my life depended on it.

If you want to make a million washing cars, you need to start with 2 million.
 

Tjmcnich

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Thank you guys for all the good info! I'll continue my research and update along the way.
 
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