Loan at the stage "Starting a business from scratch"

Who is this option for?

At the stage of “starting a business from scratch,” if it is a completely new independent business, there is no need to talk about the possibility of obtaining a loan. It is important to understand that they lend (finance) those businesses in which the risks of repayment of funds can be calculated. If it is impossible to calculate the risks, then this is no longer lending, but investment. And professional lenders usually do not invest.

Where to look for money?

From the point of view of the founders, the ideal source of financing for starting a business will be their own money. But, if you invest your own funds in a business, then become its market lender and invest money at the market rate. Otherwise, you are deceiving yourself, because the financial result of the company is achieved due to the personal gain you lost from placing these funds in other investments.

It is important to understand that in order to find external capital, you need an MVP (minimum viable product) - a minimum viable product with which you can get feedback from the first users of the product, and, as a result, determine how much your business hypothesis is working, what needs to be changed, to meet the needs of users, and what they are willing to pay for. And to create an MVP you need all the same money.

If you don't have your own funds, then:

You can consider options for cash loans for individuals from banks and various financial companies. But there are a number of limitations here:

a) This is a fairly limited amount of funds (on average, no more than $ 10 thousand).

b) It is very expensive. Real effective profitability can reach 1% per day (365% per annum).

c) Too high risk - the founders are responsible with all their property. In fact, it is not the business that gets the money, but the owners personally, with all the ensuing risks.