Startup Business 101

Startup Funding 101: The Best Business Loans for New Entrepreneurs

John Reyes Episode 99

1. 

Not All Loans Are Created Equal—Understand the Types First

 

Most new entrepreneurs don’t realize how many types of loans are out there, and they often chase the wrong one for their stage. There are term loans, business lines of credit, SBA loans, microloans, and equipment financing, just to name a few. Some are great for buying inventory, others for building working capital, and others for startup costs.

 

Explain each type simply and include how they’re typically used. For example:

  • A term loan works like a mortgage—lump sum up front, repay with interest over time.
  • A business line of credit is more flexible—you borrow what you need, when you need it.
  • SBA loans are partially guaranteed by the government, so they come with lower risk for lenders (and often better terms for borrowers), but the process can be slow and paperwork-heavy.


2. 

SBA Loans Are Great—But Not Always Easy to Get

 

SBA (Small Business Administration) loans are one of the most popular funding options for startups because of their lower interest rates and longer repayment terms. But here’s what many people don’t know: they aren’t actually given bythe SBA—they’re issued by banks and guaranteed by the SBA.

 

You’ll need:

  • A detailed business plan
  • Strong personal credit
  • Proof you’ve invested some of your own money (also known as “skin in the game”)

 

They’re not fast, and approval is far from automatic. But if you’re building a strong foundation and need significant capital, they can be worth the effort.


3. 

Your Personal Credit and Financial History Matter—A Lot

 

Most startup loans rely heavily on your personal credit because the business itself doesn’t yet have a financial track record. If your credit score is low or your debt-to-income ratio is high, you’ll likely be seen as a high-risk borrower.

 

Teach your audience that your personal finances are your business’s credit until you build business credit. That means it pays to:

  • Clean up personal credit reports
  • Reduce outstanding debt
  • Show consistent income and financial responsibility

 

Also, if possible, start building business credit early by opening a business checking account, getting a DUNS number, and responsibly using a business credit card.


4. 

Start Small with Microloans or Local Lenders

 

If you don’t qualify for big bank loans, microloans (usually under $50,000) from nonprofit organizations or Community Development Financial Institutions (CDFIs) can be a great starting point. These lenders are often more flexible, willing to work with new entrepreneurs, and focused on helping underserved communities.

 

Many local credit unions and regional banks also have small business lending programs that are more personalized than big national banks. You might not get rich overnight, but you’ll build a solid relationship and credit history that can lead to bigger financing later.


5. 

Have a Clear Plan for the Money—and for Paying It Back

 

The worst thing you can do is borrow money without knowing exactly how it will help grow the business—and how you’ll repay it. Lenders want to see a detailed use of funds: Are you using it for marketing, product development, payroll, or equipment?

 

Talk about the importance of cash flow forecasting, profit margins, and your break-even point. You don’t need to be a CPA, but you do need to know:

  • How this loan will bring in more revenue
  • When you exp

Startup Funding 101: The Best Business Loans for New Entrepreneurs

 

 

Let’s face it—money feels like the biggest roadblock for most new entrepreneurs. You’ve got the vision. You’ve got the hustle. You may even have a product or service that’s ready to change lives. But when it comes to funding—actually finding the money to launch or grow your business—it’s easy to hit a wall. And for so many people, that’s where the dream quietly dies. Not because the idea wasn’t good. Not because they didn’t have what it takes. But because they didn’t know where to turn, who to trust, or how to even begin figuring out their options.

 

If that sounds like you—if you’ve ever thought, “I just need a little capital to get this thing off the ground”—then this episode is for you.

 

Today, we’re diving into the real world of business loans for startups. And I’m not here to give you the sugar-coated version. I’m here to give you clarity, confidence, and direction. Because the truth is, there is money out there—but not all money is created equal. Some loans are flexible, fast, and perfect for new entrepreneurs. Others? Complicated, restrictive, and better suited for businesses already generating cash flow. The key is knowing the difference—and knowing how to position yourself to get approved.

 

We’re going to walk through the major types of loans available to startup business owners today—from traditional bank loans to SBA loans, microloans, lines of credit, and even community-based funding sources that most people don’t even know exist. We’ll talk about what each one is, what it’s typically used for, and—most importantly—what lenders are really looking for when they evaluate a new entrepreneur like you.

 

But this episode isn’t just about the money. It’s about ownership. It’s about giving you the tools to make informed decisions, to avoid the financial traps that sink so many businesses before they even get started, and to walk into that bank, credit union, or funding meeting with your head held high. You’re not just asking for money—you’re presenting an opportunity. And once you understand how to communicate that opportunity—with a solid plan and a smart strategy—you become the kind of entrepreneur that lenders actually want to work with.

 

So whether you’re just starting to explore funding, or you’ve already been turned down and need a second chance, I want you to know this: you’re not out of options. You’re just getting started. And today, we’re going to give you the knowledge, insight, and encouragement to move forward with confidence.

 

Let’s dive into the strategies, stories, and secrets behind getting funded the right way.

 

I’m John Reyes, and this is Startup Business 101.

 

 

Not All Loans Are Created Equal—Understand the Types First

When you’re just getting started as an entrepreneur, there’s a lot of talk about “getting funding.” But what most people don’t tell you is this: not all loans are created equal. And if you don’t understand the types of business loans available, you can easily end up applying for the wrong one—or worse, getting the right loan at the wrong time.

 

Now, before we dive into the types of loans you might consider, let’s clear the air on something important. Getting a loan isn’t just about money. It’s about alignment. It’s about choosing a financial tool that supports the specific goals of your business. Whether you’re trying to launch your idea, stabilize your cash flow, or expand to a new location, the type of loan you choose should fit your mission like a glove.

 

Let’s walk through the major categories of business loans in a way that’s clear and practical. No fluff. Just real-world guidance you can use.

 

1. Term Loans — The Classic Route

 

Think of a term loan like a mortgage for your business. You borrow a lump sum of money up front, and then you repay it in fixed installments—usually monthly—over a set period of time. These can range from short-term (12 to 24 months) to long-term (5, 10, even 15 years in some cases).

 

This kind of loan is ideal if you know exactly what you need the money for. Let’s say you’re opening a second location and need $50,000 for the buildout. Or maybe you’ve landed a big client order and need to buy a bulk inventory shipment. A term loan gives you predictable payments and, if your credit is solid, decent interest rates.

 

But here’s the catch: most lenders want to see a track record. If you’re brand new, you might struggle to qualify for a term loan without strong personal credit, collateral, or a co-signer.

 

Real-world tip: If you’re confident in your revenue projections and have a well-outlined plan, term loans are a stable choice for business growth or expansion.

 

2. Business Line of Credit — Your Flexible Financial Lifeline

 

Now let’s talk about flexibility—because sometimes, what you really need isn’t a big chunk of money, but access to funds when you need them. That’s where a business line of credit shines.

 

Imagine it like a credit card, but with lower interest rates and better terms. You’re approved for a certain amount—say, $25,000—but you only pay interest on what you actually draw. Need $5,000 for a marketing campaign? Great. Need another $7,000 later to cover a seasonal dip in sales? No problem.

 

Lines of credit are perfect for cash flow management, covering unexpected expenses, and smoothing out slow months. They can help you avoid relying on personal credit cards or scrambling for last-minute funding.

 

Pro tip: If you’re in a seasonal business (like landscaping, retail, or events), having a line of credit in place before you need it can keep you stable during slow periods and ready to seize new opportunities when business picks up.

 

3. SBA Loans — A Powerful Option with Some Paperwork

 

SBA loans are often described as the “gold standard” for small business funding, and for good reason. The U.S. Small Business Administration (SBA) doesn’t lend directly, but they guarantee a portion of the loan made by banks or other lenders. This reduces the risk for the lender, which means you get better interest rates and longer terms.

 

The most common SBA loan for startups is the SBA 7(a) loan, which can be used for working capital, equipment, real estate, or refinancing debt. The downside? They’re paperwork-heavy. You’ll need a strong business plan, financial projections, and good credit. The process isn’t quick—but it’s worth it if you qualify.

 

Example: Say you’re a veteran starting a mobile detailing business. You’ve got experience, but not a lot of cash. An SBA loan can help you buy the van, purchase equipment, and cover startup costs—all with lower interest and a reasonable repayment period.

 

Remember: Patience is key. This route is slower, but it’s powerful, especially if you’re looking for stability and growth over the long haul.

 

4. Microloans — The Underrated Underdog

 

If you’re not ready for big bank loans or if you’ve been turned down elsewhere, don’t overlook microloans. These are typically smaller loans—usually under $50,000—offered by nonprofits, local development agencies, or mission-driven lenders like Community Development Financial Institutions (CDFIs).

 

What’s amazing about microloans is they’re often designed specifically for startups, women-owned businesses, veterans, or entrepreneurs in underserved communities. They come with flexible terms and may include mentoring, business coaching, or access to a network of resources.

 

True story: There are founders who launched coffee carts, mobile pet grooming services, or Etsy-based product lines thanks to a microloan of $5,000–$10,000. That small push created big momentum.

 

If you need a boost to buy equipment, design packaging, or build your first website—this is a solid, beginner-friendly path.

 

5. Equipment Financing — Get the Tools Without the Strain

 

Let’s say you need expensive tools or machinery to operate—maybe you’re a salon owner needing new chairs and dryers, or a gym outfitting your first space with weights and treadmills. Equipment financing is designed just for that.

 

The equipment itself acts as collateral, which reduces the lender’s risk. That makes this option easier to get approved for—even if you don’t have perfect credit. You usually make monthly payments over a set term, and once it’s paid off, you own the equipment outright.

 

This type of loan keeps your cash flow intact while still giving you access to the tools you need to get to work.

 

Hot tip: If you’re starting a business that requires physical tools to make money, like a pressure washing company or a photography studio, this is one of the smartest funding options to consider.

 

Final Thoughts

The most important takeaway is this: don’t just chase the first loan someone recommends or the one you heard about on social media. Match the loan to the specific stage, need, and vision of your business.

 

Ask yourself:

  • What exactly do I need this money for?
  • How quickly do I need it?
  • Can I realistically repay it with my current or future cash flow?

 

That clarity will lead you to the right loan—and ultimately, it’ll save you a ton of stress down the line.

 

You don’t need to be a financial expert to navigate funding—you just need to ask good questions, stay informed, and pick the tool that fits the job. And that’s what sets you apart from the pack—not just dreaming big, but building wisely.

 

 

 

SBA Loans Are Great—But Not Always Easy to Get

If you’ve ever Googled “best loans for small businesses,” chances are you’ve seen three letters pop up everywhere: SBA. That stands for the Small Business Administration, and their loan programs are often painted as the golden ticket for new entrepreneurs. Lower interest rates? Check. Longer repayment terms? Check. Smaller down payments compared to conventional loans? Also check. On paper, it almost seems too good to be true.

 

But here’s the part you might not hear until you’re already knee-deep in the process: SBA loans are amazing—but they’re not always easy to get. And that’s not said to scare you. It’s said to prepare you—so you don’t give up when the process feels more like a marathon than a sprint.

 

Let’s get something straight right out of the gate: the SBA doesn’t give loans. They guarantee them. That means the actual lender—the one cutting the check—is still a bank, credit union, or an approved SBA lending institution. What the SBA does is reduce the risk for that lender. They say, “Hey, if this small business can’t pay you back, we’ll cover a portion of the loss.” That guarantee is what opens the door for small business owners who might otherwise be turned away by traditional banks.

 

Now, why does that matter? Because while the SBA makes these loans possible, it’s still the lender who sets the pace. And that means paperwork, patience, and a whole lot of preparation.

 

Let’s talk requirements. First up: you’re going to need a business plan. Not a napkin sketch. Not a vague idea. A real, structured plan. One that clearly outlines what your business does, who it serves, how it makes money, what your market looks like, and how you plan to grow. If you’ve never written a business plan before, don’t let that overwhelm you—this is actually a powerful step. Writing your plan forces you to think through your model, refine your vision, and present yourself as a serious business owner, not just a dreamer.

 

Next, let’s talk credit. SBA loans are not credit-blind. Your personal credit score matters—big time. Most lenders look for scores in the mid-to-high 600s at minimum, with the best terms usually going to those in the 700s and up. Why? Because the SBA might guarantee a portion of the loan, but you are still the one responsible for paying it back. Your credit history tells the bank how trustworthy you are with money—and if you’re still building that credit profile, it may be worth spending time cleaning it up before applying.

 

Then there’s something called “skin in the game.” You can’t walk into a lender and say, “I need $100,000, and I’ve put in $0 of my own money.” They want to know you’re financially invested in this business—not just emotionally. That could mean $5,000 you saved over time, $10,000 from a prior job, or funds you raised through a crowdfunding campaign. The amount varies, but the principle is the same: if you’re not willing to bet on yourself, why should they?

 

Now, here’s where many entrepreneurs stumble: the timeline. SBA loans are not fast. If you’re in a situation where you need capital yesterday, this may not be the route for you. It can take weeks—or even a few months—to go from application to approval to disbursement. There are steps, forms, documentation, background checks, and more. But that’s the trade-off: you get better terms in exchange for a more thorough vetting process.

 

But here’s the good news—many entrepreneurs have navigated this path successfully. And if they can do it, so can you. Take, for example, a small bakery owner in Denver who used an SBA 7(a) loan to fund a new storefront. She spent months preparing her business plan, consulting with her local SCORE mentor, improving her personal credit score, and demonstrating that she’d already invested $15,000 of her own savings into her business. Yes, it took time. But the result? She secured a loan with an excellent interest rate, manageable monthly payments, and the capital she needed to grow her dream.

 

Or consider a veteran-turned-entrepreneur who wanted to start a mobile auto detailing service. He didn’t need a massive loan—just enough for a reliable van, equipment, and marketing. With guidance from his local Small Business Development Center (SBDC), he prepared his SBA microloan application. Within a few weeks, he had $15,000 in funding, and today, his business is thriving.

 

The lesson here? SBA loans aren’t impossible. They’re just intentional. They require planning. Discipline. And a willingness to slow down and do things right.

 

So, if you’re listening right now and wondering whether it’s worth it—whether you should even try—let me say this: you absolutely should. If your business solves a real problem, if you’ve done the work to validate it, and if you’re willing to prepare, then an SBA loan can be one of the smartest financial moves you’ll ever make.

 

Take advantage of the resources available to you. Reach out to local SBA partners, like SCORE or your nearest SBDC. They offer free mentoring and workshops to help you get your plan, projections, and documents in order.

 

And remember—your business deserves a strong foundation. And the right loan, structured around your actual needs, can give you exactly that.

 

So don’t let the paperwork scare you. Don’t let the timeline discourage you. If you’ve got the heart, the hustle, and a solid plan—then you’ve got what it takes to navigate the SBA process.

 

You’re building something real. Something worthy. And that journey? It starts with one confident, informed step forward.

 

 

 

Your Personal Credit and Financial History Matter—A Lot

Your personal credit isn’t just a number—it’s your financial fingerprint. And when you’re just starting out, it can be one of the most powerful (or problematic) tools in your toolbox. Why? Because at the beginning of your business journey, your business doesn’t have a credit score. It doesn’t have cash flow history. It doesn’t have tax returns. It has nothing for lenders to evaluate—except for you.

 

If you’re applying for a startup loan, a line of credit, or even an equipment lease, the bank is not really betting on your business—they’re betting on you. That means your personal credit score, your debt-to-income ratio, and your overall money habits become the deciding factors in whether you get approved, how much you get, and at what interest rate.

 

This can be frustrating for new entrepreneurs who feel like their dream should be judged on its potential, not their past. But let’s flip the script: this is empowering—because it means there’s something you can do about it. You have control over this part. And you can start fixing it today.

 

So let’s talk about what matters.

 

First, your credit report. You need to know what’s on it—because lenders sure do. Go pull your credit report from all three major bureaus: Equifax, Experian, and TransUnion. You can get one free report per bureau each year at AnnualCreditReport.com. Look for errors—collections you’ve already paid off, accounts that don’t belong to you, or outdated negative marks. These things can drag your score down unfairly, and disputing them can give you a quick and legitimate boost.

 

Next, your credit score itself. Most lenders want to see a score in the 650–700 range or higher. If you’re not there yet, don’t panic. It just means now is the time to start being intentional. Pay bills on time. Avoid opening too many new credit accounts at once. And most importantly, pay down your balances—especially on credit cards. Your “credit utilization rate”—how much of your available credit you’re using—is a huge part of your score. If you’re maxed out on a $5,000 card, that’s a red flag. But if you’re only using $1,000 of that same limit, that’s a green light.

 

Then there’s debt-to-income ratio. This is the percentage of your monthly income that goes toward debt payments. Even if you have a decent credit score, a high debt-to-income ratio tells lenders that you’re already stretched too thin. So before you apply for funding, look at ways to reduce your monthly obligations. Can you pay off a small car loan? Consolidate a few credit cards? Every reduction helps.

 

But credit isn’t just about borrowing—it’s about demonstrating responsibility. So start laying the foundation for business credit as soon as you can. That starts by separating your business finances from your personal ones. Open a dedicated business checking account. Not only does this make taxes and bookkeeping easier, it tells banks that you’re serious about operating as a legitimate business entity.

 

Next, apply for a DUNS number through Dun & Bradstreet. This is essentially the business version of a credit file. It allows you to start building a track record that lenders and vendors can reference in the future. It’s free and easy to obtain, and it’s a step many entrepreneurs skip—not because it’s hard, but because they don’t know about it.

 

Then, if your cash flow allows, get a business credit card. Use it wisely—make small purchases, pay them off in full each month, and build a reputation for financial reliability. Over time, this will help you transition away from needing to lean on personal credit so heavily. It also opens doors to better terms and higher limits later.

 

Let me give you a real-world example. I worked with a business owner who wanted to open a mobile dog grooming service. Her idea was solid, her demand was high—but her personal credit score was under 600 due to a few missed payments and high credit utilization. She didn’t get approved for the startup loan she wanted. But instead of giving up, she got to work. She pulled her credit reports, disputed a few errors, paid off two store cards, and brought down her utilization over the course of six months. Then she reapplied—and got approved with better terms than she expected. Now her business is thriving, and she’s got both personal and business credit on track.

 

That’s the power of ownership. Not just owning a business—but owning your finances. You don’t need to be perfect to get started. You just need to be intentional.

 

So here’s the big takeaway: your personal credit is your business credit—at least in the beginning.Treat it that way. Protect it. Improve it. Leverage it. And use it as the bridge to build something greater.

 

And most importantly—don’t let a low score define your potential. You can change your credit. You can change your financial habits. And you can absolutely build a business that’s funded on your terms.

 

 

 

Start Small with Microloans or Local Lenders

Let’s be honest: not everyone qualifies for the massive six-figure loan from a big-name bank when they’re just starting out. You might not have years of tax returns, a vault full of personal savings, or a pristine credit score—and that’s okay. That’s not where every great business begins. In fact, some of the best businesses—the ones rooted in community, creativity, and grit—start with something smaller, more personal, and often more impactful: microloans and local lenders.

 

Let’s break it down.

 

Microloans: The Unsung Heroes of Startup Funding

 

Microloans are typically small business loans under $50,000—often ranging between $5,000 and $25,000. They come from nonprofit organizations, government-backed programs, or Community Development Financial Institutions (CDFIs). These aren’t the Wall Street giants. These are mission-driven institutions focused on helping entrepreneurs—especially first-timers, minorities, women, veterans, and those in underserved communities—get a real shot at building something.

 

And that’s what makes them powerful.

 

Unlike traditional banks that rely heavily on credit scores, collateral, and long business histories, microloan providers often care more about your character, your story, and your plan. They may ask: “What’s your business about? Who does it serve? Why does this matter to you?” And they’ll work with you to structure terms that make sense. It’s not just about capital—it’s about partnership and belief.

 

Let me give you a real-world example.

 

There’s a woman named Ana Lopez who immigrated to the U.S. with a dream of starting her own bakery. She had no credit history, no big investors, and very little savings—but she had recipes, talent, and an unshakable vision. She applied through a local microloan program and secured $15,000 to buy equipment, lease a small space, and print some marketing flyers. That bakery, which began with a few dozen cupcakes and a lot of heart, now employs 10 people and serves hundreds of customers a week. And it all started because someone gave her a chance when the big banks wouldn’t.

 

That’s the magic of starting small.

 

Local Lenders: Relationship-Based Banking

 

Another route often overlooked by new entrepreneurs is local credit unions and regional banks. These institutions don’t always have the flashiest ads or the most complex loan products, but they do have something far more valuable: relationships.

 

When you walk into a local bank or credit union, you’re not just another number in a national database—you’re a neighbor. These banks often take the time to get to know you, your business idea, and your goals. They can provide more personalized service, more flexible underwriting criteria, and often a faster decision-making process.

 

You may not walk away with a million-dollar loan on day one—but what you can build is something even more important: trust. And trust opens doors. It means that next year, when you need a little more funding to expand your business, they’ll remember how you started. They’ll remember how you made your payments on time. They’ll remember that you didn’t just take a chance—they took one on you, and it paid off.

 

One of my close friends started a mobile auto detailing business with a $7,500 loan from his local credit union. That was enough to buy equipment, wrap his van, and set up a simple website. He didn’t have to jump through hoops. He just had to show a plan and a willingness to work. Within a year, he paid off the loan and had doubled his client base. That small loan was the spark. And the relationship with that lender has continued to serve him every time he’s needed to level up.

 

Build Now. Scale Later.

 

Here’s the truth I want you to hold onto: you don’t need a fortune to get started—you need traction.Microloans and local lending aren’t about getting rich overnight. They’re about planting a seed that grows over time. They give you the resources to take your first steps—to create that first product, land that first client, rent that first space, or test that first idea.

 

And just as importantly, they give you the chance to build credibility. Every on-time payment, every successful milestone, every updated report you send to your lender—it all adds up. It builds your financial story. And when you’re ready for bigger funding down the road—when you want to open your second location, expand to a new market, or launch a full-scale product line—you’ll have a history. You’ll have proof that you’re not just a dreamer, but a doer.

 

So if the big banks say no—don’t stop there. Go local. Go small. Go with lenders who believe in your potential, not just your paperwork. Find the nonprofit in your city that helps small businesses. Look up your nearest CDFI. Walk into your credit union and say, “Here’s my idea. Can you help me get it off the ground?”

 

Because here’s what I’ve learned from years of helping startups grow: it’s not how big you start—it’s how consistent you stay. A few thousand dollars in the right hands—with the right mindset—can create a legacy.

 

 

 

Have a Clear Plan for the Money—and for Paying It Back

Think of borrowed money like fire. In the right hands, it can cook a feast, warm a home, and fuel an engine. But in the wrong hands—or without control—it burns everything down. A business loan, without a solid plan, doesn’t create freedom. It creates pressure. Debt is a tool. And like any tool, it can help you build or it can cause serious damage.

 

Too many entrepreneurs make the mistake of borrowing based on hope. They say things like, “Once I get the money, I’ll figure it out.” But lenders don’t give money based on hope. They give it based on confidence—and confidence comes from clarity.

 

Before you sign that loan agreement, ask yourself: What exactly is this money for?

 

Not in broad strokes—like “to grow my business” or “to help me get started”—but with specific, line-item thinking. For example:

  • $4,000 for new inventory based on my last 90 days of sales.
  • $1,500 for targeted Facebook ads to test a proven funnel.
  • $2,000 for equipment that will increase production capacity by 30%.
  • $2,500 for hiring a part-time assistant to free up time for more sales.

 

This kind of specificity doesn’t just make your loan application stronger—it makes your decision-making sharper. You’ll avoid waste, stay focused, and be able to measure whether the loan is actually helping.


Forecast the Flow: Cash Is King

 

Once you know how you’re going to use the funds, you also need to know how the money is going to come back. That’s where cash flow forecasting comes in.

 

Don’t be intimidated by the phrase—it’s not rocket science. Cash flow forecasting is simply the act of predicting what’s coming in (sales, revenue, recurring income) and what’s going out (expenses, loan payments, payroll, supplies). It’s your blueprint for survival. And more than that—it’s your strategy for sustainability.

 

Here’s how it works in practice:

  • Let’s say you borrow $15,000 and your repayment is $420/month.
  • How many sales do you need each month to cover that payment, plus your regular expenses?
  • Are those sales realistic based on your current pricing, traffic, and conversion rates?
  • What will your business look like in 3, 6, or 12 months if that debt is managed well?

 

Answering these questions allows you to make intelligent, confident decisions—not emotional, reactive ones.


Know Your Profit Margins and Break-Even Point

 

Let’s say you’re using the loan to scale production or increase inventory. That’s great. But if you’re selling a product for $25 and it costs you $18 to make, package, and ship it, you’re not making $25—you’re making $7. And that $7 has to stretch far enough to cover overhead, taxes, marketing, and now loan payments.

 

So here’s the golden question: How many units or services do you need to sell to break even—and how many to actually grow?

 

Let’s break that down with an example:

  • Your fixed expenses (rent, utilities, software) are $3,000/month.
  • Your variable costs (product or labor per sale) are $10 per item.
  • You sell your product for $30, making $20 profit per item.
  • That means you need to sell 150 units just to break even—before you even think about profit.

 

Knowing this number gives you power. It sets your minimum sales target, informs your pricing, and ensures your loan doesn’t put you deeper into a hole—it lifts you out of it.


Borrow with Confidence, Not Desperation

 

Here’s the truth most people don’t say out loud: It’s okay to borrow—but do it from a place of control, not chaos. Lenders are far more willing to take a chance on someone who walks in with a clear, well-researched, and intentional plan than someone who says, “I just need money to keep going.”

 

So take the time to prepare:

  • Outline your use of funds clearly.
  • Project your revenue and expenses for the next 6–12 months.
  • Map out how the loan will increase your ability to earn—not just plug a hole.

 

This doesn’t just increase your chance of getting approved. It also reduces the emotional stress of carrying debt. When you know why you borrowed and how you’re paying it back, that monthly payment doesn’t feel like a weight. It feels like an investment that’s doing its job.


You Don’t Need to Be a CPA—Just Be Responsible

 

Look, you don’t need a degree in finance to do this well. You just need to be thoughtful, honest, and proactive. If spreadsheets scare you, there are free tools like Google Sheets, Wave, or apps like QuickBooks that can help you track income and expenses. You can also reach out to a bookkeeper, a mentor, or a local small business development center to walk through your numbers.

 

The point is this: when you lead with a plan, you lead with power.

 

The businesses that grow are rarely the ones with the biggest loans. They’re the ones that use their funding wisely, manage their cash carefully, and always keep an eye on their mission. If you can answer, with clarity, how your loan will create growth and how you’ll pay it back—you’re not just borrowing money. You’re building momentum.

 

 

Conclusion

So, let’s take a breath and bring it all home.

 

We’ve just unpacked a world that, to many new entrepreneurs, often feels overwhelming and out of reach: the world of startup funding. But if you’ve been with me through this episode, I hope you’re walking away with something more powerful than just knowledge—I hope you’re walking away with clarity, courage, and conviction.

 

You’ve learned that not all loans are created equal. You now understand that a term loan is different from a line of credit… that SBA loans offer powerful advantages, but come with some hurdles… and that microloans and community-based lenders may be the perfect stepping stone when you’re just getting started. You’ve seen that personal credit matters—because when your business is brand new, you are the business. And perhaps most importantly, you’ve heard how crucial it is to have a plan—not just for how you’ll spend the money, but how you’ll earn it back and grow stronger because of it.

 

And here’s what I want you to take with you: you don’t have to be a financial expert to make smart decisions. You just need to be a determined learner. You need to ask questions, do your homework, and build relationships with people who want to see you succeed—whether that’s your local banker, a mentor, a community development organization, or a fellow entrepreneur who’s just a few steps ahead of you.

 

Because the truth is, money will never replace hustle. Loans can buy you time, equipment, or breathing room—but they won’t build your brand, nurture your customers, or sharpen your craft. That’s your job. And if you’re willing to do that work, then the right kind of funding isn’t a burden—it’s a blessing. It’s a tool that helps turn vision into reality.

 

Now, here’s your next move:

Sit down and write out exactly what you would do with a loan. Not a fantasy budget—but a real, focused, thoughtful list of how the money would move the needle in your business. Then, reverse engineer how you’ll pay it back. Look at your revenue, your pricing, your goals—and calculate what it will take. This one simple exercise can turn your dream into a plan—and that plan into a pitch. From there, you’re no longer just hopingfor funding—you’re prepared for it.

 

And if you’re not quite ready to borrow yet? That’s okay too. The time you spend preparing now will give you leverage and confidence when the moment comes. Because when opportunity knocks, it’s not the most gifted or lucky who answer the door—it’s the most prepared.

 

You’ve got this. And if today is the day that you go from thinking like a dreamer to operating like a CEO, then this conversation was worth every second.

 

Thank you for tuning in to this episode of Startup Business 101. I’m John Reyes—and remember:

 

You don’t need a fortune to build a future. You just need a plan, a little faith, and the courage to start.




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