Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
Many startups use loans to fund their business. Here are a few ways to set up a payment structure and schedule.
For payment structure you can use:
Interest-only payments — in the beginning the startup only pays out the interest and later pays the original loan.
Deferred start of payments — you may consider starting payments 6 to 12 months after the loan is taken to give the startup time to build product and close customers.
Pay back when you can — this is the easiest of all payment options which gives the startup lots of freedom in paying back by deferring the start to some date in the future.
You will need to determine how much will be paid when the payments start so you can create an amortization schedule.
Once you’ve decided on the loan amount, the interest rate, term, and payment schedule, you can plug those numbers into an amortization calculator to create a schedule of payments needed over the life of the loan.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
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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.