PRIVATE VIDEO**
Summary
TLDRIn this informative video, Porsha introduces 'Startup Loan School,' guiding entrepreneurs through four primary funding options for their businesses: personal funds, community outreach, seeking investors, and obtaining loans. She discusses the pros and cons of each, including the benefits of not repaying community funds like crowdfunding and grants, the challenges of securing investors, and the common yet complex loan options. Porsha's expertise in SBA startup loans shines as she navigates the complexities of business financing, offering insights on personal and business financing, and the various types available pre- and post-revenue generation.
Takeaways
- 💼 Starting a business often requires initial funding to get it off the ground.
- 🏦 Porsha specializes in SBA startup loans and aims to educate on various funding options for startups.
- 💰 There are four main funding options for businesses: personal funds, community outreach, investors, and loans.
- 👛 Using personal funds is the first option, but it may not be feasible if there isn't enough savings or if the risk is too high.
- 🤝 Community outreach involves crowdfunding and grants, which don't need to be repaid but can be hard to secure.
- 🧐 Seeking investors includes finding angel investors or venture capitalists, which can be challenging and requires convincing them of the business's potential.
- 💳 Personal financing options include personal loans, HELOC (Home Equity Line of Credit), and personal credit cards, each with its own advantages and drawbacks.
- 🏢 Business financing can be divided into pre-revenue and post-revenue options, with different types of loans and credit available at each stage.
- 🏦 SBA Loans are backed by the government and offer longer terms with lower monthly payments, but have a higher barrier to entry.
- 🛠 Equipment financing and hard money loans are specific types of pre-revenue business financing tailored to equipment purchases and real estate investments, respectively.
- 💳 Business credit cards can provide quick access to funds but may not offer the necessary capital for significant startup costs and come with high interest rates.
- 🏢 Post-revenue financing options include merchant cash advances, term loans, and asset-based financing, each with its own terms and suitability for different business needs.
Q & A
What are the four main ways to fund a startup business mentioned in the video?
-The four main ways to fund a startup business are using personal funds, reaching out to your community (crowdfunding or grants), seeking an investor, and obtaining a loan.
Why might someone choose not to use personal funds to start their business?
-Someone might choose not to use personal funds because they either don't have enough savings, they don't want to risk their own money, or they prefer to explore other funding options.
What are the pros and cons of crowdfunding and grants?
-The pros of crowdfunding and grants are that they don't require repayment. However, they are difficult to secure because it's hard to get people to invest or find grants, which are highly competitive and can take time to get approved.
What types of investors are discussed, and how do they differ?
-The video discusses angel investors and venture capitalists. Angel investors are individuals who invest in exchange for equity, while venture capitalists work for firms and also seek equity but typically prefer businesses with high growth potential.
What is the difference between personal financing and business financing?
-Personal financing shows up on your personal credit report and includes options like personal loans, HELOCs, and credit cards. Business financing does not affect your personal credit report and includes options like SBA loans, equipment financing, and business credit cards.
What are the potential drawbacks of using credit cards for business funding?
-The drawbacks of using credit cards include high interest rates, limited funding amounts, and the fact that they are not ideal for long-term investments due to the accumulation of interest over time.
What is a HELOC, and why might it be a good option for some business owners?
-A HELOC (Home Equity Line of Credit) allows you to borrow against the equity in your home. It's a good option because it typically offers favorable terms, but it requires home ownership and using your home as collateral.
What are some business financing options available before generating revenue?
-Before generating revenue, businesses can explore SBA loans, equipment financing, hard money loans, and business credit cards. Each option has specific requirements and benefits depending on the business's needs.
What are merchant cash advances, and why should they be used cautiously?
-Merchant cash advances provide quick access to funds, often within 24 hours, but they come with high interest rates and can significantly impact your cash flow, making them a risky option for long-term financing.
What is asset-based lending, and how does it work with real estate and equipment?
-Asset-based lending involves using assets like real estate or equipment as collateral to secure a loan. For real estate, lenders may place a mortgage or second mortgage on the property, and for equipment, they may place a lien on the equipment until the loan is repaid.
Outlines
💼 Funding Options for Startups
Porsha, an expert in SBA startup loans, introduces the video series 'Startup Loan School' aimed at educating entrepreneurs on various funding options for their businesses. The paragraph covers four main funding methods: personal funds, community outreach (crowdfunding and grants), seeking investors (angel investors and venture capitalists), and obtaining loans. Each option is discussed with its pros and cons, highlighting the challenges and considerations involved in using personal savings, the difficulty of securing grants, the selectivity of investors, and the prevalence of personal guarantees in business financing.
🏢 Business Financing: Pre-Revenue and Post-Revenue Options
This paragraph delves into the specifics of business financing, categorizing it into pre-revenue and post-revenue options. Pre-revenue options include SBA loans, equipment financing, hard money loans, and business credit cards, each with its unique benefits and requirements. Post-revenue options expand to include merchant cash advances, term loans, and asset-based financing using real estate or equipment. The paragraph emphasizes the importance of understanding the terms, interest rates, and the potential impact on cash flow for each financing method, providing a comprehensive overview of the financial avenues available to growing businesses.
📢 Engaging with the Audience for Further Guidance
In the concluding paragraph, the speaker invites viewers to engage with the content by subscribing for more information, asking questions in the comments, or sharing additional funding options they may know of. The call-to-action encourages interaction and emphasizes the speaker's commitment to sharing valuable insights and knowledge gained over the years, particularly in SBA loans and other business lending areas, to empower entrepreneurs with the necessary tools to start and grow their businesses successfully.
Mindmap
Keywords
💡Startup
💡Funding
💡Personal Funds
💡Community
💡Investor
💡SBA Loans
💡Personal Financing
💡Business Financing
💡Pre-revenue
💡Revenue
💡Asset-based Financing
Highlights
Introduction to Startup Loan School with Porsha, an expert in SBA startup loans.
Four main ways to fund a startup: personal funds, community outreach, investors, and loans.
Using personal funds like savings or retirement accounts for starting a business.
Challenges of crowdfunding and the benefits of grants without repayment obligations.
The difficulty of securing grants due to high competition and approval times.
Exploring investor options like angel investors and venture capitalists for equity.
The appeal and challenges of securing investment from specific business sectors.
Personal financing options including personal loans, HELOC, and credit cards.
Advantages of HELOC for business funding with favorable terms.
Limitations of credit cards for long-term business funding due to high interest rates.
Business financing options categorized into pre-revenue and post-revenue stages.
SBA Loans as a government-backed option with longer terms and lower monthly payments.
The hurdles of obtaining SBA Loans and the support available for navigating them.
Equipment financing as a method for acquiring equipment with a lender holding the title.
Hard money loans for real estate investments and their accessibility with credibility.
Revenue-based business financing options including merchant cash advances and term loans.
Risks and considerations of merchant cash advances despite their quick availability.
Variety of term loans available from banks and the importance of business revenue for eligibility.
Asset-based lending using real estate or equipment as collateral for business loans.
Invitation for viewers to engage with specific funding inquiries and subscribe for more information.
Transcripts
you're here because you've either just
started your business or you're planning
to start your business and you need
money to get it off the ground so let's
go over all of your options to fund your
startup my name is Porsha and I've spent
the last six years learning all the
different ways businesses can get money
to start and grow I now specialize in
SBA startup loans but this channel is
going to be so that you can understand
all of the resources that are available
to you and your startup business welcome
to Startup loan school so there are four
main ways that you can get funding for
your business you can either use your
own personal funds you can reach out to
your community you can seek out an
investor or you can get a loan so let's
dive into all of these options
individually and go over the pros and
cons so the first option of using your
own personal funds like most commonly
your savings account or your retirement
accounts so if people don't use this
option or if you don't want to use this
option right most likely it's because
you don't have it you don't have enough
of it or you don't want to gamble with
your own money but this is the first
option that we all have to start a
business and grow a business but if this
one doesn't work for you let's move on
to reaching out to your community so if
you're going to reach out to your
community this is most likely going to
be crowdfunding and grants now a lot of
times this is money that you don't have
to pay back so that's definitely a pro
however with crowdfunding is these are
individuals that you're reaching out to
and you're basically asking them to
invest in your business believe in you
and it's hard to get individuals to part
ways with their cash as far as with
grants you're also asking people or
programs and organizations to believe in
you and invest into your business but
it's hard to find grants and they're
highly competitive and they also can
take a while to um actually get approved
and and get going so with that these
options aren't the easiest to get so if
you haven't been successful with
reaching out to your community getting
grants or getting people that you know
to invest in your business let's move on
to option three of getting an investor
so if you're going to try to seek out an
investor this is either going to be an
angel investor or a venture capitalist
Now with an angel investor this is going
to be an individual that has money that
wants to invest in your business and
exchange for equity and with Venture
capitalists these are people that work
for firms who have money who will invest
into your business for Equity now with
that it's just not easy again to get an
investor to invest in your business or I
think more people would do it and
there's specific businesses they like as
well
however if this is for you great if it
is not we'll move on to the fourth
option of financing which is my favorite
topic and also the most common way that
people fund their business besides
self-funding so let's get into this so
there's personal financing and there's
business financing personal financing
does show up on your personal credit
report business financing does not
however contrary to popular belief most
business financing still has a personal
guarantee but we'll go into that in
another video so let's go over the types
of personal financing that you can
receive there's a personal loan there's
heog and there's personal credit cards
so with the heog this is going to be a
home equity line of credit right and you
have to have a home and you have to have
equity in that home in order to receive
it so you are using your home as
collateral in order to get funding for
for your business and some people may
want to do that some may not but the
good thing about a HELOC is they
normally have really really good terms
but again not everybody has that option
so there's also credit cards but with
credit cards although they are very for
the most part they're easy to get they
may not give you all the cash you need
to actually start your business and
again there it's not cash so if you do
need cash to actually put into your
business it's most likely not going to
be from that credit card and Plus credit
cards do have for the most part High
interest rates and so if this is a
long-term investment that you're seeking
this is not something that you want on
your credit card and just racking up the
high interest over the years so you NE
you shouldn't really use a credit card
to fund long-term Investments with that
a personal loan is cash now that
personal loan is good because it's also
fairly easy to receive as long as you
have a job and decent credit but with
the personal loan they do have higher
interest rates than business loans the
the good business loans
but it is an option now if you don't
want to go on the personal side and you
want to go on the business side well
let's go over some of your business
financing options so with business
financing it's going to break up into
two categories business financing that
you can receive when you are pre-revenue
and business financing that you can
receive once you start making money with
your business so let's go into the
pre-revenue first you have four options
you have SBA Loans you have equipment
financing
you have hard money loans and you also
have business credit cards so with SBA
Loans these are this is from the small
business administration or these are
loans backed by the small business
administration but they're still given
out by Banks and lenders you know that
you know of it's just that bank and
lenders more likely to give you money
because it's being backed by the
government startup loans are risky so
with the SBA they're good because they
normally have 10-year terms and so you
have payments that are stretched out and
you have so low monthly pay payments
it's not going to suck cash dry from
your business as you're trying to get
started but with that the SBA does have
a lot of hurdles in order to get into it
so we do help out on the SBA side so I
can help you with that now the SBA is
definitely a pro but there's also other
options so you have credit cards but
with the credit card it's not cash again
and business credit cards as it start up
most likely you're not going to receive
a large amount so um you may need more
Capital than what a business credit card
can give you and then on top of that it
depends what you're using it for if it's
a long-term investment like you're not
trying to pay it back right away they
carry High interest rates although they
do have promotional rates like 0% for 12
months maybe 24 months but you're still
over time going to pay back a lot of
money using a credit card so let's jump
into equipment financing with equipment
financing this is strictly for people
that are looking to finance equipment
you can basically get a lender that will
purchase that equipment for you and hold
on to the title until you pay it off and
hard money loans this is strictly for
people looking for Real Estate
Investments um and that's the type of
loan that you know you can get um fairly
easy as long as you can show some type
of credibility on your part that you
know where you're doing so that's on the
pre-revenue side on the revenue side
when it comes to business financing
there's going to be for additional
options there's merchant cash advances
there's term loans there's also asset
based financing using your real estate
and asset based financing using
equipment so if we go into merchant cash
advances basically this is high interest
short-term debt but you can get it in 24
hours so if it's like an emergency for
your business um you basically have this
option but it can suck your cash flow
drive so I would be very cautious before
using a merchant cash advance or getting
a merchant cash advance next you have
term loans so remember SBA Loans is a
type of Term Loan but the SBA is back by
the government so with regular term
loans Banks and lenders they have all
types of term loans that they have
within their institution right they have
their own minimum requirements
government's not necessarily regulating
these loans to to a degree but they can
make the terms on this and let you know
what it is and so there's so many
different types of term loans that exist
within every bank and every lending
institution and a lot of times if it's
not backed by the government then you
have to already have made money with
your business in order to receive it
because it's more so a a risk factor now
term loans uh regular term loans they
have better interest rates a lot of
times than personal loans but sometimes
it can be neck and neck but at least
with the term loan again it's a business
loan and they do carry a lot of times
they carry longer term length than say a
personal loan so that's on the term loan
side there's also asset based lending
right and so with asset based lending
using your real estate you have business
lenders that will put a mortgage or
second mortgage morgage on your property
and basically give you a business loan
but again now you are using your
property however now that you have that
collateral you just have access to more
money so there's the same concept using
your equipment asset based lending using
your equipment so if you have equipment
that's free and clear you can get a
lender that will put a lean on that
piece of equipment and then they'll give
you a loan that way as well so those are
all of your funding options for your
startup business I can go into more of
them um if there's one specifically that
you want to know more about just let me
know in the comments or if there's one
that you know of that I did not talk
about let us know in the comments and if
you found this information valuable just
make sure you hit that like button and
I'm going to just I'm going to share so
much information with you guys that I
have learned these past years with SBA
Loans and other types of business
lending and so that you can have all the
tools you need to start and grow your
business so if you want this information
and this is going to be helpful and
valuable to you make sure you subscribe
I'll see you in the next video
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