ESYB2 071 - Raising Money From Loans
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[00:00:00] Now, let's talk about raising money from loans. And of course, this is different for every country that you might be in, but it's actually quite similar across many countries. So, what's the problem with getting loans? Is that you're basically spending money on your business that you do not have and have to pay back.

And as we know, most businesses fail. We hope that your business will succeed, but statistically, most businesses fail. So, even if you fail, you're gonna have to start from scratch. But then not really because you're starting in a negative place where you're not starting from scratch. You're starting with a lot of money in debt.

So be very, very careful about starting your business by taking a loan. Luckily for most entrepreneurs, they don't get to shoot themselves in the foot with the loan because it's actually really hard to get a bank loan for a business that's not started. Really hard to get a business loan. So what people usually do is take a Personal loan and put that towards their business.

Now, I can [00:01:00] sit here and I can tell you about how risky it is and all that, but if you have your mindset on it, most likely you're not going to take my advice. At least, that's my experience with entrepreneurs. They say, yeah, yeah, yeah, it's risky, but if they really want to, they do it. And there are times when loans make sense.

For example, if you just need to borrow a small amount to get some equipment, if you just need a loan to get you up and running to get going, that's fine. Because starting your business is extremely important and if you can get there, get there. But there is a risk that you should be aware of. Now, if you are set on raising money from banks, usually there is a caveat where banks mostly loan to existing companies.

And most banks have approximately a benchmark of 4, 000 to 6, 000 a month in revenue, where they view you as less of a risk and are more likely to loan to you. But if you go to smaller banks, regional banks, they often Take bigger risks [00:02:00] meaning if you haven't started there might be a chance That you can submit a business plan or some kind of proposal to them and they might give you a loan But you have other options to get a loan because right now there are these micro lenders that have popped up I'm gonna give you a few examples of them that you can try out on your own right after this video The first one is Lendio.

com. It's an online site. You basically go there, fill out their form, and what they do is they, they go out and they match you with potential lenders they have. And they'll tell you, we can match you or we can't match you. So they kind of do a lot of the work for you, for a small business loan. Now there's also Prosper.

com, which is a really cool idea, which is crowdsourced lending. Kind of like Kickstarter, but instead of getting money for free, you're just getting a loan. But it's crowdsourced, so it's like, Many people giving you a little amount, but combined to give you the full amount. And additional sites for micro lending are cabbage.

com and fundera. [00:03:00] com and there's a few others. Usually sites like Cabbage and Fundera are still good and apply to them, but usually they do have that threshold where you have to be in business and you have to have a certain amount of revenue per month. So, if you still want to take the risk of getting a loan now, At least you have options.

You have options which are regional banks, the big banks, and at least four of these micro lenders. So now you have a variety of options to try. And what you can even do is try to raise a smaller amount from each in case you cannot get a large amount from just one of them. That might make it easier if you try to get a smaller number.

