PRIVATE VIDEO**

Summary

In 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.