How to GET 7 LOANS! | 14-Minute Guide

If you're just getting started in business as an entrepreneur and you're looking at, "How do I get a loan for my company?" then this video is for you. What's up, Believe Nation? It's Evan. My one word is believe and I believe in you. I want to see that crazy thing that you've got inside here, this big idea, explode on into the world so that you can have a big impact for your friends, for your family, for your community, and for the world. One of the questions I get asked a lot is, "How do I get a loan for my business? I'm just starting out. How do I get money to launch this big idea?" And so in this video, I'm going to share with you my 7 ways to get a loan as a startup. Way number 1 is through banks. And banks are the typical place that people think about. I need a loan, where do I go? I go to a bank. The challenge here though, I want to give you a quick caveat because you need to know when you're walking into a bank, banks are not super startup friendly. Banks exist not to give high-risk loans out to startups and startups are in the highest risk category of any business. And the challenge you have is separating your business from everybody else. From the 95% of other companies that are failing, why are you going to be the one that's successful? Proceeds. And so banks typically will not fund companies that have less than 3 years of experience. And so this video is targeting towards startups. You don't have 3 years of experience, 3 years of financials in your company. And so the chance of you getting a loan just based off your business is super low. Typically the only way to get a loan from a bank as a startup is based off your personal credit. So if you have crappy personal credit, you're unlikely to get the loan. If you have decent personal credit and you've been working towards building that up, then there's a good chance the bank will give you a loan. But again, it's personally guaranteed. So if something goes wrong, they're taking your house, they're taking your car, they're taking some of your assets. It's not against the business. As soon as you can get to the point where any financing is against the business, that's where you want to be. Just in case something goes wrong, they're not taking your house away. So since banks are not a fantastic option for startup entrepreneurs, let me give you 6 more options on this list. Number 2 is friends and family. This is kind of risky because, you know, if your business does not take off, your friends and family are on the hook. And so that might cause some anxious Christmas dinners or Thanksgiving parties or birthday events. And one thing you want to be really, really clear on here is thinking about the family member, the friend that you have. Are they going to regret this for the rest of their life? Are they going to be on you the rest of their life if it doesn't work out? Being super clear up front that this is really, really risky. An example, Jeff Bezos, when he was starting Amazon.com, he went to his parents to get a loan for his business, to get the startup capital to get going. And he said, "There's a 70% chance that I'm going to fail," which is actually a lot lower than what the actual chance is for most entrepreneurs. "There's a 70% chance that you're never going to see your money again. Are you okay with that?" And they still gave him the money to do it. right? And so having that optimism that you want to be able to build this big thing and you think you're going to succeed, but also having a temper to let people know that they may never see their money again. And is that okay? Because you don't want to burn relationships because of money. It's the worst thing to be able to be in a fight over. And so typically though, with a startup company, that's where you get the funding to go. If you're looking at $50,000 and under, It's typically friends and family. It's not typically from bigger companies or investors or banks. It's from friends and family. And so it may not be your closest friends and family. Sometimes it's the people in your network. It's often called golf course preferred money. The idea here is you go and you take your friends out for a round of golf and then you go to the clubhouse and you talk about your business. You know, doing some kind of activity together and letting them know what you're up to, reaching out to your network beyond just your kind of immediate immediate family and letting them know again, there's a big opportunity, but there's also a risk that they'll never see that money again. Number 3 is individual investors. Typically we call these people angels. Angels sometimes go on the debt side. So we're talking about how to get a loan, not how to get an equity investment. Angels will sometimes go on the debt side where they'll give you a loan. And this is typically where you can't go to the bank, you can't go anywhere else. And so You get a loan, you're gonna likely expect a higher interest rate because it's riskier, right? The riskier a project is, if everybody else has turned you down, it's a higher risk opportunity. And so you're gonna have to pay a higher interest rate. What I would try to do if you're reaching out to individuals, first of all, how do you find them? Usually it's through your connections, usually it's through informal networks. Most people don't say, "Hey, I'm an angel investor, give me your pitches and proposals," because they'd be bombarded with people. So the way to get through is typically through your lawyers, through accountants, through bookkeepers, through people who are dealing with these kinds of people on a regular basis. So first step is talk to your lawyer, talk to your accountant, talk to your bookkeeper. If you don't have any of those lined up, ask your friends, do you have a lawyer, do you have an accountant, do you have a bookkeeper that I could talk to? I want to talk to them about my business and also potentially look at pitching some investors. And the more of those kinds of people you could talk to, an investor likely isn't gonna have a website to say pitch me ideas, but they will listen to their lawyer or their accountant or their bookkeeper who's giving them ideas and say, "This might be a good fit." Next, when you're doing the pitch, also make sure that you're getting something more than money. If I'm working with an angel investor, I wanna work with somebody who can potentially help my business either through some advice or some mentoring, some connections, sales, opening doors. The money is great, but you want somebody who can bring more than just that initial phase of funding to you. That's called dumb money. You want people who are what they call smart money, who's going to be able to bring a lot more to your business as well. Way #4 is government grants. This is not quite a loan. Sometimes it is, sometimes it's not. A hardcore, like, official grant is just you get money, you never have to pay it back. But a lot of government programs also are loan-based where they pay either zero interest or a really low rate of interest. And a lot of these government programs are based off super specific criteria. So if you're a woman entrepreneur, there's programs. If you're a Native entrepreneur, there's programs. If you're an African American entrepreneur, there's programs. If you're a young entrepreneur, there's programs. Depending on how you classify, there's different programs. It can also go by industry. So there's programs for tech, there's programs for retail, there's programs for all sorts of different industries. And one of the biggest challenges is figuring out which programs are available for for me. And you can also have them at a city level, at a state or province level, and at a national level. Lots of different programs. In Canada, we have a program— in Toronto at least, we have an organization called Enterprise Toronto that's run by the government, and part of their role is to help kind of figure out what programs you might be a fit for. I'd highly recommend seeing what government agency is in your local community that might be able to help you make that decision of who to apply to and what grant or loan might be the best fit for you. Sometimes there are restrictions on government programs. So as an example, the government might fund a program for you, but you have to keep your company and your technology in your country for the next 5 years, right? We have a, we have a program in Canada like that, that if I did that, it would prevent me from selling my company to an American company because the tech has to stay here for at least 5 years. And so looking at what kind of restrictions might come with it. The biggest downside about government programs is it just takes so long for it to happen. You know, entrepreneurs, we want things to happen ASAP, right now, immediately. We're entrepreneurs, we're impatient, we want things to just motor through. And dealing with big corporations and banks is painful and slow enough, but dealing with the government is a whole other beast. It's just such a long waiting period that if you're just waiting for that to come through, nothing's going to happen in your business. So I would recommend if you're looking at the government options to have that as an option, pursue it, and at the same time start building up whatever you can with your business so that you're not just waiting 6 months or a year for some government check to come in. Way number 5 is through customers, and this is one of my favorite ways. Pre-sell your product or your service to potential customers. So this is where services like Kickstarter come in, or if you're just launching a website and you're promising a product and you're doing pre-orders for a campaign. A buddy of mine is launching a new clothing line and he has a mock-up or sample of one hoodie that he's trying to sell, and he's taking pre-orders to see how many can he sell before he goes out and buys it. It's fantastic because one, You're not giving up any equity in your business, so you're not losing a percentage of your company. Two, you're not taking out a typical loan where you have to pay interest and principal back every month. And three, you're only actually moving forward on your plan if you have sales. It's no risk because you're making money before you're spending money. And so whether you're using a platform like Kickstarter or whether you're just using your own network or your website or your social media, Whatever idea you have, I would try to just put together a presentation, a mockup, a sample, a demo, and then go out and try to get orders for it. Don't say that it's available yet. Don't say like, "Hey, I'm going to take this order and it's for sure going to happen." You say, "This is pre-orders. We need to hit 1,000 units or 10 units or whatever your number is going to be, and if we hit that, then we're going to make them." And tying your customers into your goal is a great strategy 'Cause if they know you need to sell 100 for this to be made, maybe they tell their friends about it. Maybe they buy an extra one or two. Maybe they post it to the social media account because they really wanna get that product and that they know that if you can't get to 100, you're not gonna make it. And so getting that money upfront from your customers is, from this list, my favorite way to be able to fund your business. Okay, way number 6 is from your job. You know, jobs suck, but the reason to have a job is to be able to learn and to be able to understand how the industry works, to be able to make some contacts. And there's 2 ways to get funded from your job. One is you just use your salary that you're making, that hopefully you can put aside some money every month so that it's not all going towards paying off your bills and you're just living paycheck to paycheck. And that may mean living below your means for a while to get get the money to do what you want to do. Some people use it as an opportunity to start becoming an entrepreneur by leaving their job, leaving being an employee, and then contracting their services back to the same company they're working for. So whatever you're doing at the company, the job that you're currently working at now, go and talk to the boss and say, "Listen, I would love to be a continuous part of your company. I want to keep adding value to what you're doing, can we make it that I'm a contractor for you instead of an employee? And maybe then you reduce your number of hours, maybe you go from 5 days a week to 4 days a week, or slowly that evolves over time. As a contractor, as an entrepreneur, you get to take home a lot more money because you can write off a lot more things as part of your business. You're not spending after-tax dollars on everything, and that can help fund your next evolution of your company. The other thing you can do with a job is try to look for opportunities to create a business. So are any of the customers that you're working with potential customers for your new company? Are any of the people on your team people that you can work with on your new business? So don't go to a job just to collect a paycheck and hate your life. You go to a job to learn, to mentor, to grow, to make connections, to potentially sell your services to, and that becomes a little incubation for your next business. And way number 7 is through suppliers. This is a more innovative strategy to be able to get your company off the ground, but Think about where you're gonna be spending your money. So you need X amount of dollars to launch your business, right? You need whatever it is, $10,000, $25,000. Where are you gonna spend that money? Who are you gonna be spending it with? And then go have a conversation with those people to see if it's something that you can work out. If they really believe in your mission, your vision, your plan, that this is gonna work out, that you're gonna grow with them, you're gonna give them referrals, you're gonna increase the business that you do with them, they may be able to give you credit. They may be able to say, "Okay, you know what? We will give you your first 500 hoodies. Go out and sell those. We'll give you those on credit, then come back and pay us." And so it doesn't always have to be from friends or family or government or banks or jobs or customers. It could also come from the supplier side if you can strike up some interesting unique ways to be able to get the products or service that you need upfront in advance on credit. Credit, and then go out and start making some sales. So that's what I got. Those are my 7 ways to get a loan as a startup. I want to thank Maud Abou-Sal for giving that recommendation. If there's a topic you want me to cover in another 7 Ways video, check out the link in the description. You can go and cast your vote. I'd love to know from the 7, which one was your favorite? Which one are you going to apply immediately to your business? And is there an 8, 9, 10 that you want to add to the list? Share it down in the comments below. Below. Really excited to see what you have to say. Thank you guys again for watching. I believe in you. I hope you continue to believe in yourself and whatever your one word is. Much love, guys. I'll see you soon. Raise your standard. Apple, at the core, its core value is that we believe that people with passion can change the world for the better. Not Not one drop of my self-worth depends on your acceptance of me. I don't ever give up. I'd have to be dead or completely incapacitated. Hey, Believe Nation! If you want to see my all-time favorite top 10 rules of success, I have a very special secret video for you. These are the individual clips that I have personally learned the most from and applied to my life and my business. Check the link in the description for details.