Startup Finance

Oleksiy Nesterenko Startup Financing Tips for Your Small Business

Entrepreneurs are full of great ideas and powerful ways to implement them, but like anything in life, starting a new business requires a hefty stack of cold, hard cash. At one time, gathering this cash required hours of traipsing business plans to one investor after another, hoping one would be interested enough to invest. This approach often took years and yielded disappointing results.

Oleksiy Nesterenko explains that getting a startup loan for your small business can be a pretty daunting experience. You need the loan to get the business started, but the bank needs you to be in business for 2 years in order to get the loan in the first place. Talk about a catch 22! As much as we like to bash on bankers, you have to look at it from their point of view. They are not in the 'investment' business, but they lending business. Their job to their investors is to make sound investments in solid companies so they can appease the shareholders of the bank. Having said that, here are some tips by Oleksiy Nesterenko for finding the financing you need to get your business off the ground and going.

1. Find a partner-You bring the knowledge and he brings the cash. Don't get too excited and forget about the big picture though. If you need $10,000 and your partner puts in $9,000 and you $1,000, remember that if that business grows to 10 million that he is entitled to 90% of those profits. Keep a situation like this in mind when you are thinking about bringing a partner on board.

2. Go to family-Your family, hopefully, will be a little more willing to lend you money than a bank. Plus, you won't have to answer as many questions! Just make sure that you have an understanding family and make it a point to make a formal arrangement to repay them.

3. Home Equity Line-Really, this is many times the only way that a business will give you a loan. Your equity is probably your most substantial asset so its only natural that it makes sense to utilize it. Qualifying for a Home Equity Line is a quick and easy process, much less so than a commercial loan.

4. Credit Cards-Not always the best option, but it will at least get you the capital that you need to get started. Oleksiy Nesterenko suggests that make sure you shop around for the best deal and have a plan for repaying it. It’s probably easier to do this on the personal side as well and then just make a loan to your new company for the amount that you put on the card.

5. Bank Loan- We already talked about this being a tough option, but if you go into the bank with a plan, you can probably get them comfortable. Just be aware that you are going to have to do some bending to get them comfortable. If you can get them to consider doing the loan, then it’s all negotiation at that point. They might insist on covenants, shorter terms, or pledging of all available personal assets.

Venture capital and angel investing received a lot of attention during the Internet Bubble a decade ago. However, throughout business history, most companies have been built from funds found in many places without using “OPM” (Other People’s Money)


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