Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
Equity funding is just one source of funding for your startup. There are many others such as loans.
Loans are debt instruments that must be repaid.
Startups can find it difficult to get a traditional loan from a bank.
The Small Business Administration offers several loan types for early-stage companies.
These loans come with personal guarantees and cannot be closed out with the dissolution of the business.
There’s also debt through the use of credit cards and microloans.
It’s difficult to use debt to pay for your core product development.
Debt makes sense when you have some revenue coming in to pay for the loan.
There are other types of debt, including accounts receivable, factoring in which you raise money on what customers owe you.
There’s also equipment financing in which the equipment collateralizes the debt.
Factoring works when you have paying customers and want to shrink the cash float from the time you build the product until the time you receive payment.
Equipment financing works well if you need machinery to build your product or run your business.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.