Hey GMAN, I'm going to message you back in a little bit. Got somethings to take care. I appreciate your help, and time spent replying.

 

Totally agree with ya, one truck versus ten with out minority business approved, no chance. Not around here anyways. Tampa,FL.

 

Ah! I misunderstood this:

"Hey guys , I had to type up a estimated expense and revenues report for my bank."

As meaning that you were in the process of putting your pro forma together. Banks are lending now without a lease agreement or at least a promise-to-lease in hand? My how things have changed.

 

My bank didnt want an lease agreement or anything when i bought my truck.

 

Ya, wasn't that hard to get approval . But I had to go threw interview on phone with my currently bank, he asked me about my business, liabilities, current income, expected income and expenses, and if my engine were to blow, what would I do and how would I be able to pay for it.

I thought it was awesome that the bank took the time for me to explain my situation, we actually were on phone for about an hour. The only stipulation was for me to be a limited liability corp. and one yr warranty was to be added to loan along with 9,500 down on tractor and payments of 1443.00 month on 06' pete 387 c15/475

 

When I started, they wanted to see a lease agreement in order to qualify for tier 1 terms. That was with sterling credit, putting $40,000 down on a factory ordered truck, and plenty in reserve. Of course, I was a start up. But without a lease agreement or promise to lease, what good are your numbers? You're presenting them with pro forma revenue numbers that are dependent on the situation you end up in. I'm not on your case, you've obviously done your homework. Just a little amazed sometimes at how banks conduct their business. Obviously you have some other assets and income that they feel insulate them from risk, but why ask for the projections then?

 

It depends on what is going on in a particular area. There are a couple of smaller quarries not too far from me who do load single truck operators. There is also a carrier about an hour from me, who only has dumps and hauls coal to a nearby power plant. They sometimes put on owner operators or those with their own authority. Other than those, I have no idea of what may be available in my area. Each region is different. In your area, I would expect the unions to have a stranglehold on much of the dump business.

 

Whether it is Landstar or another carrier, they will ask for proof of either workers compensation or an occupational accident policy as part of their lease agreement. Unless it is in place you won't likely be able to lease to them.

 

He mentioned that his bank requires him to set up a LLC. That tells me that the bank is more than likely setting this up as a commercial loan or a commercial line of credit rather than as a personal loan. He will probably need to give a personal guarantee, but the terms are different than when you buy a truck as an individual. They may or may not require a signed lease agreement or an intent to lease from a carrier for this type of loan. Terms could also be stretched out beyond a personal loan with this type of financing.

 

Unless you have an established business with the correlating business credit history, the underwriting procedure is going to be all about the individual...hence the personal guarantee. Whether its a business or personal loan makes little difference in the terms; it all boils down to the perceived risk. Once that's been established, you can tailor the terms to pretty much anything you want. It's all just a trade-off between length and rate. The sole fact that it is a business entity doing the borrowing does not answer the question, "From where will you generate revenue?"

You don't need to be an LLC or corporation to secure business credit. Simply establishing an EIN is enough to allow a sole proprietor to build credit separate from his personal. While you can't separate yourself legally from the obligation with this form, as soon as you sign a personal guarantee you eschew any protection you might have had with an LLC or corporation anyway. And banks rarely lend to new entities without that guarantee in place.

I've never done business as a sole proprietor and I've dealt with banks in various capacities when it comes to business lending. Obviously, they are satisfied with their level of risk in this case; probably due to other assets/income available. But I'm still surprised they don't require more in the way of revenue assurance. Then again, given what we've just gone through; much of banks' behavior is puzzling.