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It is actually preferrable to get a line of credit instead of investment as it is non-diluting, especially if the interest rate is low. There are a ton of ways

It is actually preferrable to get a line of credit instead of investment as it is non-diluting, especially if the interest rate is low. There are a ton of ways to get loans or lines of credit. In Canada (and there are probably equivalents in your country) there is: The Business Development Bank which is government backed and will lend to riskier businesses. I have taken advantage of it. It will not take on risk like a VC but if you are already profitable, it can help you grow. I've done this to a large extent as the interest is often prime + 4% which is generally amazing. The Export Development Canada which is a bank that will fund export oriented projects. You need a contract and they will advance you the expected payments. There are high interest ways of factoring accounts receivable, but the interest rates can be quite high. I've never done that as I can not justify +30% interest rates. True lines of credit are hard to achieve from a standard bank as they will want collateral that they can seize if you run into trouble. I have a software company so I never had true collateral, thus I couldn't get a true line of credit. Lastly, there is the possibility to use VISA and personal lines of credit that are tied to your assets. Just be careful that you do not screw up and put your hard earned assets at risk. Also this seems to be realistic: https://www.svb.com/blogs/alex-mccracken/guide-to-financing-growth https://www.svb.com/blogs/alex-mccracken/guide-to-financing-...

akrai 7y ago
Thanks for responding! For such lines of credit, did you have to demonstrate your business’s viability in the past? And if so, how long of a track record did you have to show? Also, would you factor accounts receivable if interest rates were lower? And agreed on being very careful on using personal loans to finance business operations.
- js4ever 7y ago
  All this depend on the amount you are asking for.
  - akrai 7y ago
    True. I was originally mostly asking about revolving lines of credit to cover cash flow needs so maybe in the $10k range for early stage ventures. But I’m open to hearing from people who need more or less. I just want to get as much input as possible!
- bhouston 7y ago
  BDC required profitability and would loan out based on my expected ability to repay. I borrowed around 300k at max from them. EDC will finance a whole export contract you have up to millions based on the client being teputable and the export contract being legit. Personal personally backed Visa usually are in the range of 5k to 30k range. Personally backed line of credit is usually up to 70% of your paid off mortage value.

akrai 7y ago

Thanks for responding! For such lines of credit, did you have to demonstrate your business’s viability in the past? And if so, how long of a track record did you have to show? Also, would you factor accounts receivable if interest rates were lower? And agreed on being very careful on using personal loans to finance business operations.

js4ever 7y ago
All this depend on the amount you are asking for.
- akrai 7y ago
  True. I was originally mostly asking about revolving lines of credit to cover cash flow needs so maybe in the $10k range for early stage ventures. But I’m open to hearing from people who need more or less. I just want to get as much input as possible!
bhouston 7y ago
BDC required profitability and would loan out based on my expected ability to repay. I borrowed around 300k at max from them. EDC will finance a whole export contract you have up to millions based on the client being teputable and the export contract being legit. Personal personally backed Visa usually are in the range of 5k to 30k range. Personally backed line of credit is usually up to 70% of your paid off mortage value.