Small Business Consolidation Loans in Michigan (30K), Indiana (20k), Wisconsin (60k)

In our last loan publication we showed you three different personal consolidation loans, and all three of them were for $50,000 each. The reasons were varied. Today we are focusing on small business debt consolidation loans.

These three business loan are different in the amounts, and the States of origin. As follows;

• a $30,000 small business debt consolidation loan in Michigan
• a $20,000 small business debt consolidation loan in Indiana
• a $60,000 small business debt consolidation loan in Wisconsin

The owners of the small business in Michigan needed $30K to pay back wages and pay off vendor debts. The second business consolidation was for $20K – the owner wanted to pay off an existing loan with the BOA that carries a high APR (12%) – the owners of this business operate out of Indiana State.

The third small business that needed a boost in capital was in Wisconsin. They did a renovation on their building/property 6 months prior to this loan application, and they have to pay back their contractor. The bill for the renovation came out higher than initially quoted (sound familiar, by any chance?).

$30,000 Small Business Debt Consolidation Loan in Michigan

Our first small business consolidation loan takes place in Detroit, Michigan. Ann Arbor, and Lansing come into play as well in regards to the lender. The reason this small business owner needed a consolidation loan is because they were behind on wages and they had some outstanding debt with two of their vendors. This applicant is applying for him and his wife under one umbrella loan, for their business purposes only.

This business is a pet grooming business about four blocks north of Highway 696 in the Farmington Hills area of Detroit. They have three different employees working for them at the time of this application, but only three months ago they had five employees working full-time hours. Of course that changes in the Fall because business slows down substantially, but because of some unforeseen expenses they had to deal with, they owe some back-pay to two of those employees that were laid off.

The total amount of back wages owing is $7500, and their total vendor debt comes to around $22,000. They owe one vendor $16,000, and the other $6000. They have always kept up with their bills in the past and they don’t want to stop being honorable with employees and their valuable suppliers.

Their bank of choice is the Huntington Bank on 10 Mile Road, and they’ve never had any problems with them before. In fact, they still don’t. They had just run out of equity that is usable credit. They don’t have any more home equity they can use to bolster their business at this time. Because of this, they are forced to find a lender besides the Huntington Bank. They tried the local credit unions and they also tried the Comerica Bank over on West 10 Mile Road, but they didn’t have any luck getting approved there either.

They decided to get a private loan and they tried looking online first. In their efforts, they ended up finding a lender here on FUSA. We don’t have many posts regarding business loans or small business consolidation loans, but we have enough similar posts that they found a place to put their pre-application through on. They put their application in on a Friday for a small business debt consolidation in Detroit. A lender from Ann Arbor contacted them and a lender from Lansing contacted them as well. They went with the lender from Lansing because of the low APR percentage rate that they were offering.

The rate on this was just shy of 7%, with a total interest paid back of $3200 (approximately), and a $909 monthly payment to be made over three years. You can see all the details, including the small business owners fico score, below in the table.

$20,000 Small Business Debt Consolidation Loan in Indiana

The second small business consolidation loan is in the state of Indiana, with the borrower living in Indianapolis, and two of the potential lenders living in Fort Wayne and South Bend. This particular small business owner has an existing loan with the BOA (Bank of America) at an APR of 12% – they owe close to $18,000 on that note. They have $2000 in bills they also would like to pay off in the same shot.

They were looking for an APR of less than 8%, and the lender in Fort Wayne was offering 9%, while the lender in South Bend was offering 7.54% (as you can see in the table below). Obviously, they went with the South Bend lender and they got a short-term on this loan of only 24 months.

They needed to borrow the $20,000 as soon as possible, before their year end, so time was a bit of a factor in this case. They managed to get everything negotiated with their chosen lender within a two day period, the time being taken to contact one another, negotiate the terms, and exchange paperwork, including proof of business income (receivables), and monthly outgoing expenses.

The FICO score of this borrower was very low at 590, and the credit score for this applicant was quite bad because he had just recently gone through a divorce, and in the process of the last two years in a bad marriage, his debts spiraled out of control. Nevertheless, his existing cash flow is fairly reasonable and the lender was willing to take a chance on him.

We haven’t got into the actual business model yet, so I would like to make a couple of quick comments on that. This entrepreneur has a used furniture store in downtown Indianapolis and has been running the store for over 12 years. Due to the economic fiasco that went down in late 2008, the monthly receivables dropped off considerably. He even had to lay off an employee for the first time in his career as a merchant and business person. It was quite heartbreaking for him at the time because he has always prided himself on making sure his employees were secure in their jobs.

The other point to bear with all of these borrowers is their current banking institutions – where they currently do their business. In this case the borrower does all of his personal banking, and his business banking at one branch. He holds his business mortgage and the property mortgage on his personal home with the Forum Credit Union right on Monument Circle, in the heart of Indianapolis. He was not eligible to qualify for approval on a small business consolidation with his branch because he no longer has any home equity left on his house because of the last four years in the downturn of his monthly receivables.

Finding a third-party lender was really the only option he had left. Luckily he did find a reputable lender and one that was willing to give him a lower APR than most conventional banks would. On his home equity business LOC (line of credit) which is $185,000 he only pays an interest rate of 4%, so of course he would rather have that instead of this new loan but unfortunately (or fortunately depending how you look at it) he had to settle for an almost 8% rate. Keeping in mind though, his last business loan with the Bank of America was a whopping 12%, he still comes out ahead with this deal and he can put the BOA behind him (allot of people doing that these days).

$60,000 Small Business Debt Consolidation Loan in Wisconsin

The last loan of the day we are visiting Milwaukee, Wisconsin, with the viable lender operating out of Madison. This is another small business consolidation loan that took place only three months ago, and all parties involved are satisfied with the arrangement and agreement. This small business owner has two partners and the three of them decided in early 2011 to do some upgrades and renovations on their floor space.

Unfortunately, they went over their planned budget of $180,000, and ended up spending $210,000. This left them with a shortfall of $30,000 on the renovations, and they also had some debts with their suppliers as well. All in total, they wanted to get one loan to look after all their pressing financial responsibilities and have one lower monthly payment to boot. In this case the borrower’s partners were in no position to get approved for any kind of personal credit, and it was really down to her to come through with the 60 grand.

Their business in Milwaukee is a Power-Vac service and they have four trucks and 12 employees on their payroll. The amount of money she needed to borrow was really not very much as far as small business expenses go, but they just didn’t have the receivables that they once had. Just like the other lender in today’s post, the economic downturn that has affected all of Wisconsin (and in particular Milwaukee and Madison), has affected their business as well.

So many of the homeowners living in the suburbs of Milwaukee don’t want to spend any extra money, and they forgo the cleaning of their ventilation systems, fireplaces, and furnaces. Even their commercial business has been affected by the economic downturn, because spending money on Power-Vac servicing no longer existed in their list of priority expense sheets. Their service is just an expenditure that most people would like to put off until another day.

As we may have mentioned above (I just looked, and we did) she chose to take out the loan with the lender living in Madison because the interest rate they were asking for was 8.5% over a five-year term. This is fairly reasonable when you consider that these small business owners weren’t able to get approved with any other conventional bank.

As you can see in this table, the FICO score of this borrower was 590 (approximately) at the time of application. This is very low, as most anybody who has ever tried to get a loan understands. This was not a big factor in the approval of this financing, because it was based solely on the past record of the business and the monthly cash receivables that showed on the books.

This was also a biweekly payment structure resulting in a payment of $559 every two weeks. The bank that this applicant uses for personal banking is the Associated Bank at the corner of East Wisconsin avenue and Water Street. And in this case she didn’t even bother applying with them, as she wanted to keep this consolidation loan separate from all personal matters and affairs. Understandable.