Small Business Loans

[Anonymous No.635388]

Shark Tank shark and registered douche Mark Cuban, on the topic of taking out business loans:
>if you start a business and you take out a loan, you're a moron
He said this confidently in an interview, but apparently took out business loans himself early in his career.

Here I am, looking to start my own business, but lacking the capital to get the ball rolling. Would I in fact be a moron by taking out a loan to start my business? What does /biz/ think about small business loans?

My business would be particularly expensive, as I will need to start a metal fab shop and take time building prototypes before anything can be marketed/sold.

[Anonymous No.635390]

The problem with a traditional loan is that your business is then immediately in debt and servicing the debt is like an anchor slowing growth. That's the advantage of equity financing.

[Anonymous No.635398]

>>635390
it really depends on your situation though, are you willing to give away a certain amount of equity just to speed the progress of your company up, because what if your company becomes extremely successful, multi billion? somewhere down the road you may regret not just taking a loan

[Anonymous No.635400]

>>635388
The best way to start a business is without a loan. If you want to start a restaraunt, start with a food cart and build from there.

Of course not every business can be started small and scaled up.

Financing sucks for two reasons: easy money is easily squandered, and the obvious interest/ losing a percent of your business.

So, take a loan if you must but I suggest treating that money like it was earned and hard to come by. Scrutinize every expense and make sure it's absolutely necessary. I'd also suggest getting an investor rather than a lender. If it doesn't work out don't let yourself be on the hook to pay back all the debt.

[Anonymous No.635401]

>>635388
>looking to start my own business, but lacking the capital to get the ball rolling

Only thing you can get a loan for is real estate and if it is commercial you must have 20% down.

[Anonymous No.635403]

>>635398
A small piece of a large pie is better than a big piece of a small pie. Selling equity lowers your share of ownership, but it also increases the value of the business.

[Anonymous No.635442]

Well OP. Look at it like this, are you expecting future cash flow or do you have current cashflow?

A company like linkedin has little debt and raises a lot of equity because it is expecting future cash flow, a company like a utility has lots of debt because of stable cash flows.

Tell me your type of cash flows and i'll tell you the mix. OP don't listen to the fraud that mark cuban is, he got lucky jumping ship in the dotcom era, take a corperate finance class online for free via itunes university.

[Anonymous No.635450]

>>635388

>thinking people don't have regrets
>doesn't have proof of concept
>no sales
>complains that it's hard to get a loan

[Anonymous No.635458]

>>635388

He had loans from friends for the most part. That said, while cuban is a good business person he'll admit himself that the only reason he made it to a billion while other great business people get stuck in the 10s of millions was luck.

[Anonymous No.635475]

>>635458
It's all luck, but the harder you work, the luckier you can get.

[Anonymous No.635479]

Literally just saw him recommend Kevin's offer to get 3x his capital (backbreaking loan) without investing

Granted they do get almost the same advice as an equity investor

[Anonymous No.635485]

>>635388

Nowadays getting a loan really is stupid because the internet allows you to get pre-funding a la Kickstarter or other methods.

[Anonymous No.635486]

>>635479
RBF can make sense if you have the margin for it. The benefit is the payments are variable, so you aren't sol if you hit a rough patch.