Operating a limousine rental business may look glamorous at the start, however the road to success may be a little bit more complicated than one might find. In starting any business, finding capital, or acquiring the best lending or financing option may be one of the hardest things to consider.
Today, most typical lenders aren’t interested in lending money to a startup limousine service business. These lenders consider it a high risk type of business, may somehow feel that their investment can be better spent somewhere else in their portfolio.
However, there are some lenders that feel comfortable in the transportation industry, and could give easy, affordable and light lending terms, a s some have already experience in financing many limo industry startups, and will cover not only limousines but additionally vehicles, shuttle buses, coach and tour buses, SUV’s and pick-ups, ambulances and hearses.
Lenders review An Applicant’s Overall Background
Most lending agencies and firms begin by reviewing a loan applicant’s background, and will need to make sure that they have experience it in this industry, or will have other key employees that can supplement this situation.
In addition, these lending firms understand that this start up business may lose money at the beginning, and will want a comfort level, such that an applicant will have a nest egg of money. An income-producing spouse that can support the cash flow demand, especially during the startup stage would be a good additional positive factor. Also, the applicant’s personal credit may be raised to a higher level to make sure that the lender has a qualified applicant.
Determining How Much A Lender Will Give To Your Start-up Rental Business
Once the lender gets passed the initial credit review stage, the amount of upfront money to qualify for a lease becomes an issue. Each lender has different standards and policies, however for the most part these lending agencies will require the applicant to raise an amount of somewhere between 10%-25% of the acquired cost of the limousine, as each limo deal is reviewed separately by the lender since in their mind, a Hummer H3 vs a Lincoln Town Car has different criteria to them.
These lending firms review the year, make and model, including the mileage and others, etc to come up with a viable financing deal. There are many lending firms that don’t like lending below $25,000 to $30,000, and a limousine no older than maybe three to four years old.
The Last Part would be Determining How Your Monthly Payments Will Be
The last aspect of the limousine rental business financing process, is finding out exactly how much you monthly payment will be. Probably the toughest part of this exercise, is getting the initial financing,and there are times when sometimes a co-signor might be necessary and additional collateral may be required.
Once you survive the initial stages, and you could show your creditors that you can survive and pay your bills, then the next move, which would be acquisition, may seem a lot easier. The requirements of financing the second lease will hopefully be much easier than the initial stages.
Vanessa Arellano Doctor