Where There’s A Will, There’s A Way… For Entrepreneurs

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borrowing money

Money

What topic conjures up more emotion, positive and negative? Which subjects stimulate more provocation than those regarding the “almighty dollar?”

As an entrepreneur, or an aspiring one, you face a history of convincing statistics that clearly show you are more likely to fail than to succeed. Why? Typically even the greatest ideas fall to the wayside because their executors simply run out of cash.

The Small Business Administration will verify this for you if you ask them.

All that aside, as an entrepreneur, you don’t care about those statistics. You have a burden in your mind and heart that just won’t go away. You’re not going to let a silly hurdle like money prevent you from pursuing your dream.

So what are your options?

For the typical startup entrepreneur, here are 5 of the most common sources of funding that are taught and leveraged by those in this exciting community:

1. Your own money (bootstrapping)

PROS

You have no creditors, investors or partners to pay back at a multiple of what you borrowed. There is no one telling you what to do and how to do it. Bootstrapping usually is an ideal funding method for the beginning stages of company growth.

CONS

If you tie up, or lose, your own cash, you may not be able to take care of your basic personal needs. It could also be detrimental to your credit rating. Or, you just may not have enough money to fuel the growth of your business.

2. Friends and family (labeled as many venture capitalists as “suckers”)

PROS

In many cases, those close to you will not scrutinize every little piece of your business plan, vision and ideas, as a bank, investor or partner would. They may not even charge you interest.

CONS

These should be obvious. It’s hard to ask people you know for favors, especially money. If your business flops and/or if you are irresponsible with their money, it could hurt or even destroy your closest relationships.

3. SBA or other traditional bank loan(s)

PROS

Pretty favorable and flexible terms and rates.

CONS

Requires an exhausting amount of documentation and red tape. Usually takes a few months, of not longer, to actually get funds.

4. Angel Investors and Venture Capitalists

PROS

Access to large amounts of money (well into 9-figures). Oftentimes, angels and VCs provide highly valuable networking connections and a plethora of business advice. The founder typically retains creative control, as the investors’ ownership interest is usually less than 50%.

CONS

You will be required to give up a portion of your equity and/or profits indefinitely. Your chances of receiving funding from a professional investor are low, and the process of preparing, pitching and getting rejected by them is exhausting and time consuming.

There is another viable, but little know, funding source available to certain entrepreneurs, which you don’t generally hear about in this startup community, probably because providers of these programs are relatively new to the market, and there are way less of them than SBA lenders, Angels and VCs.

5. Unsecured business lines of credit.

PROS

No collateral. No financial documentation is verified (based on projections). Fast turnaround times. 0% interest rate to start. No set payback period (revolving credit). Funds can be used for any business purposes without reporting or restrictions. Lines do not report to personal credit profile. No out of pocket costs. Great option for early-stage funding, or alternative if investor funding is not available.

CONS

Requires excellent personal credit (720+). Consists of 3-5 accounts with different lenders, so multiple monthly payments need to be made. Limited to about $150,000. Extra step if you want to consolidate and liquidate lines into one bank account.

Entrepreneurs like Nimeskern are the epitome of the saying, “where there’s a will, there’s a way.” One way, or another, if you have a vision and a burning desire to build a company or product that changes the world, or even just provides solutions to unmet needs of consumers in your community, (lack of) money will not stand in your way.