Re:What it's like to bootstrap a business before it can fina...
by notyourday on Tuesday December 24, 2019 @06:12PM
(#21875568)
> If you have a growing business making money it should be fairly straightforward to get a loan under your business name
That's a tale told by everyone who read books about business or took some MBA classes.
It is not the case.
You can only be guaranteed to get a loan that is collateralize by FCF. FCF loans are stupid because you pay interest on a loan that is given to you in the amount of FCF. If you already have FCF, the only reason to get that loan is to build a business credit history by, quite literally, paying for it. That credit history is irrelevant for next 5-10 years because conventional financial vehicles do not care about your credit history until it is about 10 years long.
That's why VCing is the thing. If you are small, you have growth and you have FCF, your rapid path forward is with VCs, not conventional loans
That's a tale told by everyone who read books about business or took some MBA classes.
It is not the case.
You can only be guaranteed to get a loan that is collateralize by FCF. FCF loans are stupid because you pay interest on a loan that is given to you in the amount of FCF. If you already have FCF, the only reason to get that loan is to build a business credit history by, quite literally, paying for it. That credit history is irrelevant for next 5-10 years because conventional financial vehicles do not care about your credit history until it is about 10 years long.
That's why VCing is the thing. If you are small, you have growth and you have FCF, your rapid path forward is with VCs, not conventional loans