What does it take to start this business???

I have a friend who is currently interested in starting a business with a friend. It is a bowling alley that will cost between 2 and 3 million dollars, but he doesnt have that kind of money. I don't know what to tell him except to find an angel somewhere and pitch to them but how do they work. Do they check his credit, or what is their process. He is 23 or 24 (not sure) and he only has about 30,000 dollars to his name. His friend is set, because his dad is a multi millionaire so he is kind of set I think. What does he need to do??? This friend that is with him said he would like to get financing in the same place but I have no idea how they would even start it. I kind of started my own business but it was no where near this level. Any ideas would be greatly appreciated

The first thing anyone interested in lending money to start a business is going to ask for is a business plan. They want to see how he expects to run the business, how much money he expects to make, and what kind of experience he has. If they have access, they would run a background and credit check to make sure he isn't just looking to take the money and run. Private investors may also want part ownership of the business.

Try looking at his location within his town or city and see what tax incentives the City and board members can give him.

Try to see if he qualifies for several grants for small businesses and try to advertise for lenders.

Show the lenders that they can get a good return on the investment and he will suceed.

If they are looking to build the bowling alley, they could contact a contractor and see if he would carry the loan in his name.

I know 3 University of Tennessee students that did this while in their teens. They were able to build a multi million dollar complex and they incorporated the company with the builder retaining 51% (control). (4 co-owners with building holding 51% on building only).

One thing these boys did not do was have it specified in their charter that the building had to be refinanced when the balloon came due. This was their downfall because the contractor refused to refinance at the end of 7 years and they lost everything. The balance on their loan was below $200,000.

The three young men that I know let the builder maintain 51% control. He kept upping the rent and refused to re-fi when balloon came due.

So they incorporated one business to own the building. (Also specify that the rent be mortgage + percentage of PROFIT).

They incorporated another for the businesses inside. Since the building was so large they added a few office spaces onto the end of their building so that they could rent this out.

This is a long term investment for the builder, but he will already make a profit by the time the building is finished.

This is just one of many ways.

Commercial loans are very short. Usually 7 years.