Financing options for a Wood-Mizer

[kentuckylogger]

I am starting my logging cabin business and am trying to decide which Wood-Mizer to purchase. I saw their purchase terms on their website. Has anyone dealt with Wood-Mizer on financing. I can pay cash for a manual model and would have to finance a hydraulic unit.

Does anyone know what credit score is needed in order to be approved for financing?

Thanks so much guys. So glad I found this site

[POSTON WIDEHEAD]

I would probably call Woodmizer Monday and ask them. Personally, I don't know.

[mikeb1079]

if you're starting a business i'd look HARD at hydraulics

[giant splinter]

Kentuckylogger,
I have my LT40HD financed with Wood-Mizer Financing and it is fairly easy to get set up with them to take advantage of the program that they offer. Be sure you get everything you need going in, extension, shingle lapsider, de-barker and anything else you want. Set it up from the beginning and you will be able to enjoy the works from the get go. They will be easy to talk to and will get back very quickly with your approval, if you have a working business you can take advantage of the investment credit on your taxes. You can also establish a new business an write off your expenses.
I gave my information to a gentleman in the financing end of Wood-Mizer who was very thorough by the name of Tom Ekhart who took good care of the transaction, I do have to admit he takes his time and does his job well, I have always said "if they hang me I hope they send him for the rope". I would recommend them to anyone for the financing and service. The importance of getting all the extra attachments at the beginning only because you wont be able to add them on later with an established loan using Wood-Mizer financing. I wanted to add an extension and was Informed by Mr. Ekhart that it could not be added, I should have asked if he could draft up a second loan but ill just save my money and try to find a nice used 12 foot extension and save a few bucks.

[timberjackrob]

hey kylogger the state of ky has cost share program for farmers as part of the tobacco settlement if you have any income from farming you could be eligible.my grandfather and i signed up and were approved about three years ago we got $6000 off on an lt28 which was about half of what it cost each county has different rules on how much $ they give per person just thought i would let you know.

[beenthere]

Does anyone know what credit score is needed in order to be approved for financing?

kylogger
Really no way any of us could say what credit rating WM requires. You will be best to get your answers from them, I'd think.

Wish you well getting the WM mill. Will be a great Christmas present.

[JSwigga]

If you can look into a home equity loan.  A WM loan is 11% you should be able to get a equity loan for 4-5% and save yourself a lot of money.

[mmartone]

I have a manual lt40 and wish when loading, turning, clamping etc it was a Super... my 2 cents.

[Bibbyman]

Way back when we bought our first Wood-Mizer they had one simple finance plan - pay for it before you take it home.   We financed less than half at local bank.  The hassle there was in dealing with the agricultural loan officer who didn't have a clue. I think we paid off the balance in six months with profits from custom sawing.

I'm not helping you with your finance question but I'll offer some advice.   If you have a project in mind for the mill,  make sure to get it done before the neighbors find out and want you to saw for them. 

[kentuckylogger]

Wow! Thanks so much for the different inputs. I am tapped out financially. I have bought 10 lots and 92 acres of standing timber, tractors, about to buy a 3 point hitch 360 grapple hook, and the sawmill. I am exploring any and all options. I thank you all for the advice. I have "OK" credit and my wife had good credit, but no verifiable income on her end.

I have a lot to do. Thanks you all for any and all advice. Your a very informative and thoughtful group of guys

[stavebuyer]

1. As Giant Splinter said get whatever equipment you need to start with if you go with Wood-Mizer financing as they will finance support equipment at the time of mill purchase but not after the fact.

2. Working capital; hoard it like your financial life depends on it because it probably does. If your business plan won't support making sawmill payments even at Wood-Mizers somewhat high rate of interest it won't support you either.

[Finn1903]

have you looked into Farm Buraeu Bank?  Their finanacing rates are competative with your local bank/agri loans.  I had a quick turn around on financing and the rates were better then WM.  WM is a great mill builder, but they are not a bank, that is my guess on why they have to charge more for financing. 

[Old Wood Whacker]

I am starting my logging cabin business and am trying to decide which Wood-Mizer to purchase. I saw their purchase terms on their website. Has anyone dealt with Wood-Mizer on financing. I can pay cash for a manual model and would have to finance a hydraulic unit.

Does anyone know what credit score is needed in order to be approved for financing?

Thanks so much guys. So glad I found this site

The first thing I would recommend is to write out a business plan that you can present to a finance company or bank. Credit score minimums depend on what equity you have, but typically about 635 is the bottom. But, my advice to anyone starting a business is, if possible, rather than going to a manufacturer's financing, take the time to lay out a real business plan and determine how much you will need to set up your operation, take it to a lender and ask for a long term business load and a credit line. A smart business banker will be able to tell you if what you want to do is profitable, and if not, what adjustments you will need to make to make that way. You need a reserve to cover start-up setbacks, unforeseen problems, and to pay the bills while you're putting it all together.

If you take a hard look at the overall profitability before taking the leap, it forces you to build a sound strategy from the get-go. You need you have a good estimate of fixed expenses--loan payments, insurance, labor, workman's comp, etc., as well as knowing your personal fix expenses. Then estimate all operational expenses--fuel, blades, maintenance, raw materials. Then you need to look at turnover time--how long it takes to roll over profit from your first batch of lumber. You also need to make certain you have a steady flow of logs or timber and know how much they will cost you.

Weigh out the various aspects of the business--are you just going to have a mill? In most cases, you will have to be fairly production oriented, because the mill is the least profitable of just about any production equipment, albeit usually a necessary one.

If you aren't willing to take a long, hard look at this, then you probably aren't ready to make the move just yet, and would benefit from more research, saving, planning, building credit, etc. Rome wasn't built in a day. Better to go into it prepared and with confidence, than to rush into a train wreck.

If you go to the bank armed with a solid game plan, and be realistic about what you really need to launch your business, you're going to impress the bankers a lot more than if you just go in and ask them for enough money to buy a mill, when they will be certain that you are probably going to need more to get going. 

[thechknhwk]

I financed mine against my paid off truck (well it isn't anymore) at 2.9% instead of WM's which was over 6% I think.

[Brucer]

Many of the experienced sawyers here will suggest you get as much mill as you can, and for sure with hydraulics. The thing is, they already know they really like sawing ;D. I'm the oddball. I ran someone else's mill for a year, so I knew I wanted to saw. Problem was, I could only afford a manual mill and I didn't have a track record (or enough market research) to put together a believable business plan. So I bought the manual mill.

One year later I had a track record, and a market, so I was able to put together a convincing plan. My credit union gave me a much better rate than WM on a 60 month loan. I paid it off in 20 months ;D.

My problem in writing a business plan was finding something that would work for a really small scale business. I found some samples on the web that were 40 pages long. I also found some samples that were so badly laied out that I doubted anyone would even get through it. So I did it my way.

In my mind, I walked around to the other side of the desk and pretended I was the loans officer. Than I asked myself what I would want to know about proposal. I came up with three main questions: What's he going to do with this money? How's he going to pay it back? Is my butt covered if he can't? Of course I didn't use those headings in my business plan, but I made sure all three questions were answered.

You won't find that thrid point in any business plan, but you can be sure it's sitting there at the back of the loan officer's mind. What I did to address it was to prepare a table showing at the end of each year how much I would owe and how much the mill would be worth. Because I had the equity from my first mill, my outstanding loan would always be a lot less than the resale value of the mill.

[rmack]

I know how you feel, sort of. 

I'd like a self loading log truck, problem is I really can't afford it right now. I don't need a banker to tell me that, and I suspect you don't either. 

One thing I noticed when I bought my mill, there were people showing up who assumed I had gone in over my head and would have to saw their junk logs for nothing... well I'm happy to say it didn't work out that way.

things could have been very different though.  ;D

[Old Wood Whacker]

I don't recommend using one of those canned business plans. Just lay the facts out there in on paper in a way that you can communicate them verbally. Big banks tend to shy away from loaning money to loggers, farmers or truckers. But, there are banks out there who do understand the business who will be happy to work with you as long as you have a decent credit score and can show that you know what you're doing. I've tried using canned business plans, but I don't speak their language. The more confident you are about what you're planning to do the better you can sell it. When you find a banker who speaks your language, is on the same page with you, you've found someone with whom you can build a long-term business relationship with, and that is a major success key for any business. Don't give up at the first bank. I definitely am a fan of small town banks though. The big ones are destroying the country.

[Cedarman]

One more thing to think about.  What will happen if your business is successful and you need to expand even more.  Buildings, planers, edgers, slab hogs, firewood, just to name some doors that will appear as you proceed in business.  30 years ago, I never dreamed I would be in this position when I purchased a manual LT30.
If you do expand, you will need more capital.  So get on good terms with those that have money.  There will be opportunities that are not obvious now.  You want to be in a position to take advantage of those opportunities if you choose to do so.
As has been stated, make a good flexible business plan.

[SLawyer Dave]

Kentucky:

The unfortunate fact is that more than 75% of businesses started in the U.S. do not survive 3 years.  The major reason for this is because the people starting the business don't have the financial reserves to survive until the business becomes self supporting.  That is why so many people start a "part time" business on the side, while they continue to work their normal job.   The "standard" business rule is that if you are going to be totally relying financially on the new business you are going to start, you need to have financial reserves available to support yourself and your business for at least 3 years.  Now I am the first to say that such a "book rule" is pretty unrealistic for most of us, (I certainly did not have that for any of the 3 businesses I have started in my life).  However, if you don't have the luxury of such a financial base, then limiting your future expenditures is the only other option you have.

I am never going to suggest someone shouldn't make up a business plan that includes what they "hope" to do with their business.  How they plan on acquiring equipment and paying for advertising, taxes, permits, supplies, wages, taxes, etc.  A good business plan can take months to put together.  Short of that, here is the best advice I can give.


Make your monthly expenses as CHEAP as you possibly can.

I say again, MAKE YOUR MONTHLY EXPENSES AS CHEAP AS YOU POSSIBLY CAN.


The trick to starting a business is not how good you can do in a "good" month, but how well you can survive in a "bad" month.  If you have a high overhead, then the chances of long term success and profitability are vastly reduced.  If you can limp along for a couple of "bad" months and survive, then you have a much better chance of finding a "good" month or two, that will help propel you into greater success. 

So the long and short of this post is....if you have to finance the purchase of a new mill, when you already indicate that you are "tapped out", then DON'T.   Look for every other option out there.  First option I would look for, is can you find someone in your area that already has a mill, that you can lease, rent or pay him to do the cutting WHEN YOU NEED IT.  While this certainly may seem to you to reduce your profitability, the fact remains that such an arrangement will allow you to pay for this expense, ONLY when you have the work and projected profit to pay for it.  Otherwise, you are going to be locked into a rather large payment every month, even if you don't have the customers and work to keep you busy.  You may think you will make less profit per job, but you can survive bad months much easier.  As the work and profit becomes more consistent, then you can save up the money to buy the mill of your choice; or then you will have the business history of profitability, to allow you to get business financing at something a lot less than 11% which is pretty *DanG high.   

Again, I can not be emphatic enough.  Keep your out of pocket costs as minimal as possible and you will greatly increase your chance of creating a successful business. 

Good Luck

[giant splinter]

High Five !! to a guy that can think standing on his feet, Nothing less than very sound advice for starting out in a small business, Dave ...... your Awesome and I second and support every bit of your response on this matter. Who ever said "free advice is worth exactly what you pay for it", may very well have missed the point of ( helping those in need ) and on The Forestry Forum we have no shortage of members that are willing to share expertise with those who ask. 

[1woodguy]

   Even us boys about as bright as a stump can detect chunks of wisdom now and then.
     Nice advice

  I thought about a mill and still do
Also purchased a property to get cedar and oak from
And thought about afew cabins
  Found several guys nearby who have mills who will cut for 20 to 35 cents

I can't seem to catch up on my day to day list of things to do
And can make more in other ways than I could milling

[ddcuning]

SLawyer has great advice. I would go a step further and say never finance anything. Being a financial coach as my side job, I am big on no debt period. I did not finance anything on my mill because I knew it was a hobby. If I don't make a dime on it for two years, no sweat since there are no payments. If you feel you just have to have a mill, start small, pay cash for what you can afford, then work up in mill size as the business grows paying cash for each increase in mill size. You want to grow the business slowly over time without accumulating debt. I know that debt free living rubs our culture the wrong way but the fact is no one is going to repo an mill with no debt associated with it.

Dave C

[Cedarman]

I am going to take a different tack on debt.  If you work for someone else, then yes, debt free is the only way to go.  But if you are going to build a business of any substantial size and it is capital intensive, then borrowing is a must.
There is no way that we could have saved a 1/2 million dollars to buy a grinder that allows us to be the size of business it takes to satisfy our customers and keep competition at bay.  Competition that would have run us out of business.
Money is a tool, just like a sawmill is.
Our goal is to be debt free as soon as possible, but are not adverse to borrowing more money if expansion is in the cards.
This is why a good solid business plan is important to make sure the likelihood of good return on investment.
There is a big difference from borrowing money for personal usage like vacations, TV's, etc and borrowing for a capital item that will increase your revenue above what it costs to pay it back.

[SawyerBrown]

I'm with Cedarman.  The old saying "It takes money to make money" is true if you invest wisely and have a solid business plan.  Eventually if you want to expand it may take forever to be able to lay out cash.  That's one reason I'd avoid WM and work with your local banker/credit union business loan officer.  Start small, take in your business plan, get a line of credit, and then make sure you make every payment on time.  That not only helps your overall credit rating, but if you work with the same loan officer again (and probably even if you don't), you've built up their trust that you know what you're doing and you're going to repay the loan.

[SLawyer Dave]

As an attorney who does both business consulting and bankruptcies, I see Cedarman and ddcuning as talking about two sides of the same coin, rather than being at odds with each other.  Debt is Never a good thing, but at times, (and especially in business), it is often times your best option. 

In my personal life, (and as I advise all of my clients), I try to avoid as much debt as I possibly can.  I have a mortgage on my house, because otherwise I could not acquire one, and it is financially better for me to have this debt, and the tax write off it gives me.  That is it.  I have financed a single car purchase in the past, but I doubt we will see 0% financing again, so I save up and buy used vehicles.  I have 2 credit cards that I don't use, but have as back up for an emergency.  Otherwise I use my bank card, which works as both a debit and credit card, but all of the funds come out of my checking account, so there are no interest charges.  Keeping my personal monthly expenses low, allows me to financially survive even during "bad" months, while still able to meet my financial obligations.

I also have 7 employees who's families depend on their paychecks.   So In my business, I have a "credit line" available should I have a cash flow problem in a given month, (which I religiously try to avoid).  I also have outstanding business loans that I needed to acquire necessary equipment, (why is it that computers are cheap, but a Computer Network and Phone System cost a bizillion dollars?). However, when I first opened my office, (sheesh, 17 years ago), I "leased" these systems, as that was all I could afford.   

So again, the basic premise for ALL of us should be that DEBT should be avoided like the plague where possible.  However, if the debt makes financial sense, and will actually save or make us more money than the cost of the debt, then it may well be the best option. 

Here, however, given the few facts Kentucky gave us, I could not advise financing a mill purchase like he is considering, if there was any other possible option.