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Old 04-13-2013, 05:44 AM   #1
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Default INvestors return?

Thanks everyone for giving up a minute or two.

Basically, I have an investor thats wants to loan me 20K for 3 years but wants to know what type of return I can give him over the 3 years.

My biz did 180-190K but the profit was small.

what does the board think would be a fair "FLAT" return per year for that contribution or if you had your own experience please share!

Thanks you.
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Old 04-13-2013, 08:11 AM   #2
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Why do you need a loan? I don't beg borrow or steal. To many strings attached and to much risk. If you only grossed under 200k, you are not liquid enough to be in debt.

What do you need to purchase with the 20k that will help you realize more profit in the long run?
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Old 04-13-2013, 08:45 AM   #3
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Default Return

I have business line of credit, if bills are due, and a lot of money is Tied up in jobs it is handy to have. The two banks I deal with have a 5% and 6% apr for a floor currently. Rate can go up if prime rate goes above that, but no lower. You have to pay the interest every month, but pay the principle whenever you can.
My loc rate used to be .5% above prime, but when prime rate went below 3% , the bank established the 5% floor.
If you own, or have a mortgage on a home you can take out a home equity loan against your equity for about 2.5% apr these days.
I currently have a zero balance on my business line of credit, but have it in place if needed, with a phone call they will deposit any amount if you need to make payroll or pay bills.
I agree with the above post though, don't borrow jack **** unless absolutely necessary, nothing sucks worse than having to make interest payments.
If you do have to, start a spread sheet listing all your monthly overhead, and include that interest payment a part of your hourly cost so it is being covered by your hourly rate.
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Old 04-13-2013, 09:01 AM   #4
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I agree with Hog somewhat if you need some operating cash to get you though a job or two then fine. What would you invest that 20k in to make you more money? I avoid getting into to much debt, but if you plan to put all that 20k into advertising that you will see and increase in business and that makes sense then I don't see a problem.
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Old 04-13-2013, 09:54 AM   #5
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what are business loan rates?

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Fixed Rate Secured Loans
New, used, or refinance: equipment, machinery, and tools.
Rates current as of April 1, 2013.Term Rate
0-12 months 5.49% APR
13-24 months 5.49% APR
25-36 months 5.59% APR
that should give you a benchmark



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Old 04-13-2013, 09:57 AM   #6
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I think a good hard look at the Balance Sheet would be in order. Also, verify that it is clean money, and not the old run money laundering through a paint business scheme.



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Old 04-14-2013, 12:18 AM   #7
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Originally Posted by vermontpainter View Post
I think a good hard look at the Balance Sheet would be in order. Also, verify that it is clean money, and not the old run money laundering through a paint business scheme.
Money is money....just saying...
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Old 04-14-2013, 12:27 AM   #8
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Personally, before looking into a loan, I'd look into how to increase the profitability of the business. More work at a small profit plus extra associated costs of doing the extra business to pay off the loan can result in a situation in which you're working harder, for little or no extra profit.
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Old 04-14-2013, 12:56 AM   #9
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Quote:
Originally Posted by Bobito651 View Post
Thanks everyone for giving up a minute or two.

Basically, I have an investor thats wants to loan me 20K for 3 years but wants to know what type of return I can give him over the 3 years.

My biz did 180-190K but the profit was small.

what does the board think would be a fair "FLAT" return per year for that contribution or if you had your own experience please share!

Thanks you.
Id stick thatmoney all in advertising....big return...the moreyou spend the more you make....
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Old 04-14-2013, 02:34 AM   #10
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Quote:
Originally Posted by richmondpainting

Id stick thatmoney all in advertising....big return...the moreyou spend the more you make....
What he said ! Yep
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Old 04-14-2013, 03:51 AM   #11
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Quote:
Originally Posted by richmondpainting View Post
Money is money....just saying...
Not really. If its new it cuts your fingers. If its old it stinks.



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Old 04-14-2013, 05:44 AM   #12
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Quote:
Originally Posted by richmondpainting View Post
Money is money....just saying...
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Old 04-14-2013, 08:32 AM   #13
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I need some one to invest into a new van for me, I will return it when it is just about dead.
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