How to Get Easy Tanning Bed Financing
- 1). Contact several banks and inquire as to their financing options. Commercial loans, unlike their residential counterparts, are negotiable when it comes to rates, fees and terms. Shop around before deciding on a lender.
- 2). Submit an application and financial package to the lender. The typical financial information required is two to three years of federal tax returns and a personal financial statement outlining your assets and liabilities. The bank will examine your credit report and analyze your debt in relation to your income. Typically they want to see a debt service coverage of at least 1.20:1. This means for every dollar you owe in debt, you have $1.20 to cover it.
- 3). Provide invoices for the tanning beds so the bank can determine loan to value. Banks will typically lend up to 70 percent of the value of new equipment (not including taxes, installation and shipping). That means if you buy two tanning beds for a total of $30,000, the bank will lend you up to $21,000, leaving you to come up with the $9,000 on your own.
- 4). Sign and accept the commitment from the bank, once the loan is approved. This will be a letter that outlines the terms of approval and the procedure for closing the loan.
- 5). Submit any additional information to the bank and pay any relevant fees. The bank may require, among other things, formation documents for your business, proof prior judgements or liens of been paid or proof that the business is in good standing. Possible fees include origination, documentation, search and recording fees. The amount will vary based on the size of the loan.
- 6). Attend a loan closing. Here you will sign several documents. A promissory note is your promise to repay the loan over "X" number of years at the interest rate set forth by the bank. A loan agreement will state that you are using the loan for business purposes and will provide updated financial information if required. A security agreement will grant the bank interest in the equipment you are pledging as collateral. The bank will file a UCC, or Uniform Commercial Code, with the state and county to record its lien on the collateral. If you do not own the building, you also will be required to provide a landlord's waiver. This is a document signed by the landlord stating that the bank has the right to enter the premises to procure the equipment in the event of a default.
