Bootstrapping
Name one challenge with using personal savings to fund a business
Can be difficult not to spend the money every time the amount gets higher.
What is the minimum personal credit score typically required to qualify for a small business loan?
680
What is NOT required for venture capital funding?
Monthly debt payments
Crowdfunding usually requires a clear idea
True
What is Personal Savings?
An amount of money saved in an individual account.
Why do entrepreneurs often choose personal savings as their first funding source?
To start their business without taking loans and avoiding debt.
Name the three main costs associated with a small business loan.
Principal, interest rate & fees
Besides capital, what two things do angel investors typically provide?
Mentorship & networking connections
What must a creator establish before launching a crowdfunding campaign?
Funding goal & Deadline
Asking friends and family for funding typically eliminates all emotional complications in business relationships.
What are the two main personal funding sources discussed for bootstrapping?
Personal savings and friends & family.
What is one major challenge an entrepreneur may face when applying for a small business loan?
The qualification rules are strict and the application process can be complicated.
What is equity dilution and why does it happen?
When a founder owns less of the company because the business issues more shares.
What is a major risk that entrepreneurs face when launching a crowdfunding campaign?
High competition & low visibility
Why do entrepreneurs typically seek personal savings and friends & family funding before bank loans?
To start their business without having to take loans and be in debt.
Name two reasons an entrepreneur might prefer bootstrapping over taking formal loans.
Avoiding debt and maintaining independence in business decisions.
Why might an entrepreneur choose a small business loan instead of borrowing money from friends or selling part of the business?
A small business loan helps them keep full ownership of the company while still getting the money they need to grow, buy equipment, or cover bills.
Why might an entrepreneur choose angel investing over venture capital?
Less risk because an individual believer supports the idea; easier access to capital; simpler process
What is one way a successful crowdfunding campaign can help an entrepreneur besides just getting money?
Free marketing
What is a key challenge entrepreneurs face when using personal savings?
It can be difficult not to spend the money as the amount grows, which may leave too little funding for the business.
Why might bootstrapping with savings or family money be risky?
It can run out or strain relationships.
What are the typical requirements lenders check before approving a small business loan application?
Good credit score, at least one to two years in business, and a strong annual revenue.
Why might a founder choose venture capital even though it means giving up a piece of the company?
Because it gives them money, help, and connections to grow fast, even if they lose some ownership.
What are two key advantages an entrepreneur gains by choosing crowdfunding over traditional financing methods
Raise capital without giving up equity or taking on debt.
Why might an entrepreneur's business strategy be limited when using friends and family as a funding source?
Because there's a finite amount of money available and the risk of damaging relationships if funds run out or the business struggles.