

Ask HN: Business credit vs funding - rytis

Situation: a small business, just starting up, no customers, early days, no money. Target market: schools, homeschooling parents, small businesses providing services to schools.<p>Question: get money as a loan from a bank, or seek for funding/investment? What are the pros and cons of each?
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patio11
You won't be able to get a business loan -- they'll want a business plan,
proven operating history, and known cash flows. At best, you'll get a personal
loan secured by you personally. The rates on personal loans are terrible (in
some cases approaching credit card cash advance interest rates, though you can
do better if you have great credit and/or shop around and find a bank that
likes you) and, even if the business folds, you remain liable for it.

Investing is another kettle of fish. My main con there would be a) it takes a
lot of time and b) there are fundable businesses and unfundable businesses,
and if I had to guess, you're unfundable. There's nothing wrong with that: I
sell software to schools, teachers, and homeschool parents, and my business is
not just unfundable, it's _laughably_ unfundable.

Have you considered bootstrapping? It really doesn't take a lot of money to
get into educational software. Trust me.

~~~
rytis
in a way yes. we're just feeding it ourselves atm...

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a3camero
This is not exactly an answer to your question, but be very careful about this
market. Schools are a challenging market to break into. Are you prepared for
the long purchase process that schools follow? Banks tend to want their
interest now. Funders will be cognizant of the time frame for ROI.

