5year old company looking to expand, unable to get financing

I have been in business for almost five years. I was able to start the business with only $15,000 in cash. We now have two locations, with six employees, and $700,000 a year in sales. One of our locations is a franchise, and our numbers are so good, that they want us to open four more stores.

The franchise will provide all of the fixtures and signage, plus a $1000 lease supplement per location until Jan 2018. All in all we would get about $35,000 worth of freebies per store. Normally the store owner has to buy all of the above 100% out of pocket, but they like our numbers so much, that they want to invest with us.

More than half of our sales are extremely low profit, and make it look to the banks that we are not all that successful. I have also had to spend the past five years slowly rebuilding the business from the ground up, since we started with the extreme bare minimum on everything. Plus we had to build up our 50k in inventory over time.

We have been attempting to spend all profits before the end of the year on new equipment and inventory, so we could avoid showing a profit to the tax man. It seemed to make the most since at the time, since I didn't need any credit, why show a profit. Now the bank is concerned that we don't show any profit that we have been working so hard to not have. However in that same time frame, we opened another two more stores (one of them now closed due not losing money, but zero profit), increased our inventory, replaced everything that we started with, and more.. I feel the two stores are worth around 120-150k, if I was to sell them tomorrow, and that's starting from 15k.

I have applied at our local bank for a SBA loan, but was turned down with little explanation. My personal credit score that the bank got was 670 (credit karma said I had a 740, so I thought it would be no problem to get the loan).

The basic expenses that I would have to come out of pocket for the first 30 days are about $14,000 per location, so about $56,000 would get all locations open. I currently have about $15,000 to float payroll for the first few months. So I was thinking about 80k loan should do fine. Even if we could just get 30k, we could open two stores, wait a few months, and open two more. Since we sell a name brand product, it's not like I need to spend any real cash on advertising to start getting customers.

What are my best options to get a lower rate loan, fast.. I refuse to pay 30%, but 10% is doable. I don't really care if it's a credit card, or a business loan.


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