self employment and banks

[visual800]

Me too.
You: The IRS wants to know your GROSS to figure out taxes, lending institutions want your NET to loan you money. It would seem to me that banks could somehow "understand" how self employed taxes are done but I really dont think they have a clue OR they dont care since a lot of bank got hammenered when the housing market crashed.

Also You: also think of this they went back past 2 years and that bout when COVID was happening

You failed their stress test because your numbers were not good enough. Are they supposed to ignore bad years you had like there will never be another? Also, why would the bank care what your gross income was, it means nothing.

Well one thing that led me to my comment was my banker told me "We try to understand self employment a little better than most institutions"....Obviously not! If they try to understand self employment a little better than other banks than I guess I was a little taken back that if you see the credit I have and the money deposited in your bank that you would somehow see that we all do better than what is reported from tax records. When you sit dormant in same location for 35 years and try to build a home I guess I am shocked how things have changed over the years.

 

[netsol]

also think of this they went back past 2 years and that bout when COVID was happening....Not a chance in hell. As I mentioned I have damn good cpa and why not keep most of my own money, it seems like the govt doesnt know how to manage money very well, lol

and you know that is true. if you wasted money like our government, you wouldn't last a week

 

[Texas_Signmaker]

Well one thing that led me to my comment was my banker told me "We try to understand self employment a little better than most institutions"....Obviously not! If they try to understand self employment a little better than other banks than I guess I was a little taken back that if you see the credit I have and the money deposited in your bank that you would somehow see that we all do better than what is reported from tax records. When you sit dormant in same location for 35 years and try to build a home I guess I am shocked how things have changed over the years.

Unless your bank is keeping the loan in portfolio, which is very rare they don't have any leeway to how they work the loan. He said that to you just to get your business, like sign people saying "yeah I'll have it ready tomorrow". Loan brokers can make big money

 

[kcollinsdesign]

Getting a commercial loan isn't that difficult provided you have the docs the banks are looking for.. Starting with a business plan. In many cases a bang will make you P.G. a business loan if you are just starting out.

This is true if you have liquifiable assets to "guarantee" the loan. Banks are not going to just take your word. The "docs" you are referring to are the contractural terms setting out the conditions in which the banks can access the collaterol assets.
Banks will be more friendly if you have substantial assets (other than the assets put up for collateral) and they can be assured that if the venture fails the investor will still be financially sound. The richer you are, the easier it gets. At this point you will be working with investment bankers and deciding on ways to mitigate risk while getting a return on the investment.

 

[guillermo]

it is weird that banks do not loan money in these cases..... I have a house, and some empty land as property, some in the city, with a lot of value, I presented that to my bank of almost 45 years, I wanted a loan of $12,000 only, my house alone is about $150,000 plus the land, presented the documents for 1 house and 2 of my land, they said NO, all together had a market value of about $300,000, all I wanted it was $12K, it was denied.

 

[BigNate]

it is weird that banks do not loan money in these cases..... I have a house, and some empty land as property, some in the city, with a lot of value, I presented that to my bank of almost 45 years, I wanted a loan of $12,000 only, my house alone is about $150,000 plus the land, presented the documents for 1 house and 2 of my land, they said NO, all together had a market value of about $300,000, all I wanted it was $12K, it was denied.

from a different perspective - this may just be too small of a loan. just some random easy to work with numbers as an example: $12k for 5 years at 10% interest - $3,297.87 is total interest the bank collects. Now this $3k has to pay for all the people-hours to create the loan, the minimal but real processing of the loan for 5 years, AND collections if for some reason you fail to pay. How many 5 year projects can you take on for how little money?

now same loan but $120k will yield $32k in interest to the bank, starting to possibly become profitable - but would still really depend on the risk and cost of collecting a failed repayment.

 

[Texas_Signmaker]

it is weird that banks do not loan money in these cases..... I have a house, and some empty land as property, some in the city, with a lot of value, I presented that to my bank of almost 45 years, I wanted a loan of $12,000 only, my house alone is about $150,000 plus the land, presented the documents for 1 house and 2 of my land, they said NO, all together had a market value of about $300,000, all I wanted it was $12K, it was denied.

If you live in Northridge cali and your home is only worth $150...that means you live in a 1930's travel trailer?

 

[guillermo]

If you live in Northridge cali and your home is only worth $150...that means you live in a 1930's travel trailer?

I just made a reference, and did not state where I live, this is in another country. But the point is the same..... he could not get financed and me either.

 

[guillermo]

from a different perspective - this may just be too small of a loan. just some random easy to work with numbers as an example: $12k for 5 years at 10% interest - $3,297.87 is total interest the bank collects. Now this $3k has to pay for all the people-hours to create the loan, the minimal but real processing of the loan for 5 years, AND collections if for some reason you fail to pay. How many 5 year projects can you take on for how little money?

now same loan but $120k will yield $32k in interest to the bank, starting to possibly become profitable - but would still really depend on the risk and cost of collecting a failed repayment.

Your are correct, but as I stated in my previous comment, this happened to me in another country, that is why the amounts are low, but over there, is a lot, lots of money.

 

[BigNate]

I just made a reference, and did not state where I live, this is in another country. But the point is the same..... he could not get financed and me either.

???