I would like to open a bagel shop but am not sure if the funding avaiable to me is the best option.?
I want to open a bagel/coffee shop, and I have funding available to me, but I am not sure if this type of funding would be the best option. Here is my situation…
I have a structured settlement from something that happened when I was a child. The deal is that when I turn 25 years of age (I am currently 22) I will receive 1086 dollars per month for 30 years. There is a company that would like to buy the first 10 years of payments from me for 70,000 dollars.
I would like to use that 70,000 dollars to open a bagel shop, but I’m not sure if I should sell out my settlement for 70,000 dollars. If I leave things how they are, I will get 130,000 dollars, but I won’t see all of that money for the next 12 years of my life.
What should I do?
If the business fails then you are out $130,000. I wouldn’t risk it.
You have a few choices. If you have a good credit rating you can try to get a SBA loan, however, you should be prepared to offer some kind of collateral. Or you can try to bring in a partner that has $70,000 to invest into your business. This would be the most expensive type of financing if you consider that your partner will take a percentage of profits as long as the business is operational. If you think that the business is successful and can return $130,000 or more to you in the next 12 years, than take the buyout from the company. Just keep in mind that if you start a new business you are taking a risk. If you can afford to loose the money you invest into the Bagel shop, than go for it. If you can’t afford to loose the money try something less risky.