LOANS AND VENTURE LEASING

Banks will usually extend loans only to companies that already have assets and cash-flow. Unless you are willing to mortgage your house and invest your personal funds into the company, getting a significant bank loan will be almost impossible at the seed stage.

Some banks have venture leasing programs that lease equipment to companies in exchange for equity and interest payments. Startups eager to conserve cash may find venture leasing an effective way of leveraging a small amount of equity to get access to expensive equipment. For example, a startup that has recently raised money at $5/share may lease $1M worth of equipment in exchange for warrants to purchase 20,000 shares at $5/share ($100,000 of equity + regular lease payments). For more information on this, read more about debt funding in the Accounting & Finance chapter.