Steve Strauss gave a fantastic presentation for CredibilityLIVE last week when he talked about different ways to get  your business or project funded. There was a lot of useful information for those who were looking to start a business and needed funding as well as for those who already had a business but needed additional funding.

Here is the recording of the full event:

During the event, Steve took tons of questions from the live audience.   Here are some highlights!

Audience: When starting your business, how wise is it to borrow unnecessarily?

Steve: “Of course we don’t want to borrow unnecessarily.” For those starting a business, you want to keep your overhead low and know how much you need to borrow (including rent, labor, buying products, how much you need to live on and multiply by six); make sure you have that much in the bank. By being conservative with the amount you need, it can help in the long run and also avoid burning bridges with your friends and family. Steve says should also make sure you have a plan to pay it back and begin paying it back on time.

Audience: Is it easier to borrow money from the bank you have a personal account with?

Steve: A relationship with the bank you are borrowing from can help. Banks are about your relationships, they want to know who you are, what’s your history, what’s your credit history, and what’s your personal banking history. These are important because you will probably have to sign a personal guarantee for the loan at some point. If you have a relationship with the bank, it can help you get a yes for the loan you need. Steve makes special note of the need to establish business credit. Though you may start out with personal loans you want to begin establishing business credit as soon as you can. You can do this by getting your DUNS number and establishing credit by opening up small accounts under the name of your business. This also helps to separate personal and business credit, which is something you always want to do when starting a small business.

Audience: We are a start up e-commerce business incorporated as a sub-chapter S. Does it make sense to sell shares of stock options to investors up to 25% of the capital we need?

Steve: There are two values in incorporating. One, it helps in separating your business and personal assets. If something goes wrong with your business it will not effect your personal assets. Second, it help in having your business taken more seriously and there are a number of ways to do this. Selling part of your company to raise funding is equity based financing. You may need to do this to fund the business. Steve does give a few words of warning about selling your stock to the outside world though. By doing this you are bringing in partners and even though they will not have a say in the day to day operation of your business, with money comes strings. They will have opinions about how to run the business. Make sure you sell your business to people you can work with.

Audience: Are there certain thresholds of financing that make it easier to be approved? i.e. Am I more likely to be approved if I request less than $10,000, $15,000, $25,000?

Steve: “There is no threshold.” It is dependent on your business, how much money you make, how much money you need, what kind of collateral you have, your credit history, etc.. There is not a magic number for getting loans. SBA loans have fairly high thresholds with microfinancing programs that go up to $50,000. Steven thinks that those loans are much easier to get than asking for a much higher loan.

Audience: Where can a start-up get advice for growing their business?

Steve: “There is so much potential advice out there right now. It’s a great time to be in business!” Start-ups are important to the economy and the SBA can help those businesses. SCORE is the Peace Corp. of entrepreneurs where business people give their time for free to those who are starting businesses. These mentors will hope you for the the amount of time you need. There are also a number of places online including USATODAY.

Audience: Can you take a loan out against your primary business account or do you need to open a separate account? This sounds similar to a cd secured loan?

Steve: If you open up a business account that is collateralized against a savings account you can do it with your own personal account, but you can do it differently to build business credit. Steve suggests opening a savings account in the name of your business using your taxpayer ID number. After you do this, take out a loan against the name of the business secured. This can also help to separate your business and personal credit.

Audience: What are your thoughts on asset based lending?

Steve: You should consider what that asset is. The most common source of financing for entrepreneurs used to be home equity. Steve does not like this method at all. There is risk involved in entrepreneurship and betting your home is generally not a good idea for a business venture. This is true in regards to any asset you are using because you want to make sure you can pay it back without losing the asset.

Audience: Where does one find possible business incubators? I had never heard of that possibility before.

Steve: “Business incubators are very cool, very interesting.” In the last twenty years, business incubators have spread to many cities in many different industries. Most business incubators are public/private entities where they come together and rent space to get discounted rent, services, and legal help. They are very good for networking because they will introduce you to other business people in the community. As they have a vested interest in the success of your business they will help you to gain that success.

Audience: As an e-commerce based business, how much is too much to spend on purchasing a web domain name that would benefit our company?

Steve: If you can find the owner of the URL try to negotiate for a better price. However you don’t want to send Google searches to another domain, if that is the case, spending the money on the URL maybe more beneficial than not having it.

How can you get more involved?

Our next CredibilityLIVE event will be on Thursday, July 28th with John Suh. John will be talking about what it takes to build a successful business. You can register for the event at!