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New Loan Funded — Help SBA cash injection! Buying the 1st of many franchises! — $25,000 at 17.50% — B Credit — DTI 16%

February 8th, 2007 | Loan Review, Prosper.com 

This is the loan that my standing order found last night.  Wow that was fast.  This loan might be the fastest to go from listing to fully funded listing to verified loan (less than 36 hours.) 

A new loan funded (Help SBA cash injection! Buying the 1st of many franchises! — $25,000 at 17.50%).  I participated via my new standing order: High Amt — Mid DTI — AF.  Which is this loan was funded as a high amount requested (>$15,000), Mid debt to income ratio (<25%) and was an auto-funding loan.  The borrow had B credit and 16% DTI.  As a reminder my standing orders only find loans with 0 current delinquencies, 10 or less delinquencies in the last 7 years, and 2 or less public records in the last 10.

With this loan I have $3,500 in principle across 57 loans ($61.40 per loan) with an weighted average interest rate of 16.32% and an account value of $3,850.89. Each loan on average is 1.6% of my portfolio with a maximum in any one loan being 3.9%.

Here is the listing:

RateLadder.com Loan

For the readers that believe in reading the actual description without modification:

This is my 2nd listing on Prosper! The 1st loan was used to increase my credit score for my SBA loan (Thanks everyone for your help!) Now my FICO is at a 693! Now I need your help again to increase the amount of funds I have available for the required cash injection. (SBA does not do 100% financing)

About Me
My wife and I established a business in 2004 with the intent of buying a franchise, but after doing some research decided to hold off until we were ready. This year, after doing lots of research, attending trade shows, and investigating franchise systems, we have identified different concepts we’d like to move forward with. In fact, we have been “awarded” the opportunity to open units for all the concepts we are interested in, and are in the final stages deciding who we wish to move forward with.      

How The Loan Will Help
SBA lenders require anywhere from a 10-30%+ cash injection. They do not do 100% financing. Currently, I have $35K in savings, and this loan will allow me to have $60K in hand which will strengthen our position with the bank - and also allow us to seriously consider all the concepts we’ve been approved for (not just the ones where we need to inject $35K). At least 2 local banks have given us the OK for us to move forward - not it is a matter identifying how much cash we can inject into our project.

Business Plan
Our plan is to go multi-brand. Meaning that we plan to purchase multiple franchises (to diversify our investment). The franchises will be a secondary source of income for us (for now), as we plan to reinvest any profits into opening another unit or concept (depending on what our research tells us to do). This is a five year agressive[sic] (but tactful) expansion plan. My goal in 5 years will be to quit my “day job” (real estate agent) and focus on managing the business and spending time with my family.

My Advisors[sic]
I have the following advisors[sic] who I work closely with to make business decisions:
* Specialized franchise and business startup attorney (Financial District San Francisco)
* CPA (Financial District San Francisco)
* Finance Consultants (who double as local business lending managers)
* SBA and Angel Investor Consultants
* Franchise Consultant (FranChoice)

My Experience
* Experience managing multi-million dollar P&Ls
* 15+ years Product / Sales / Service / Retail Management Experience
* Prior owner of 2 service and training businesses

Financial Situation
I brought in $175,000 last year working real estate and consulting jobs (already verified by prosper from the 1st loan listing). We own two homes, one is a rental, and the current one we live in has about $50K in equity. I don’t want to touch that $50K unless absolutely necessary. I will however use it in the event the business has difficulty. The $35,000 in savings will be used along with proceeds of this loan for the cash injection. Anything over the injection amount will be used for capital. I rather be overprepared!

Promise to Pay
With the dreams that we have, and goals we want to achieve, we understand the importance of good credit (especially with what we’ve experienced thus far in getting our first franchise financed). I can assure you that we have more than enough money per month to make the monthly payments on this loan. We won’t let you down! We sure didn’t on the last listing - in fact I paid it off much sooner than expected.

Thanks again for your help and consideration! Many blessings to you and your family.

 

Here is a graph of all loans on Prosper with B credit and a DTI of 16% +/-5% and Loan Amount $20,000 +/-$5,000 funded in the last 100 days:

RateLadder.com Loan Analysis

Number of Loans Average Amount Borrowed Weighted Average Standard Deviation
9 $20,666.67 15.76% 4.8%

Within one standard deviation of the weighted average, but still 1.74% higher than the weighted average.  This is a great loan rate.  I love standing orders.

What do you think?

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Loan Review, Prosper.com



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