Good Morning Sir, how may I help you today?
I would like to apply for a loan please.
Very good, and what kind of loan are you looking for?
I want a loan to buy a new home.
And how much were you hoping to apply for today?
I was hoping that I could apply for a $250,000 home loan.
First we just have to see if your credit is good enough for a loan that large.
I have a credit score of 760.
Excellent! And I also see on your credit report that you have always paid on time.
Yes, I know how important it is to pay your debts and pay them on time.
Will you be making a down payment on your new house?
I have ten thousand dollars available for a down payment and I would like to finance the rest.
I have just a few more questions for the application. What is your gross monthly income?
I make $750 a week, so I suppose my average monthly income would be about $3000.
How long would you like the life of the loan to be?
What are my options?
You can choose between a ten, fifteen, twenty or thirty year loan.
What is the difference between a fifteen year loan and thirty year loan?
A fifteen year loan will mean higher monthly payments, but you will pay less interest.
So a thirty year loan will mean lower monthly payments, but I will end up paying more in the long run?
That is right. Which would you prefer?
I think I would rather pay it off sooner and not pay as much interest.
Then we will sign you up for a fifteen year loan.
What is my interest rate?
Based on your credit report and excellent credit score, your interest rate will be 5.9%.
That is great! Where do I sign?
Just fill out this remaining paperwork and we will get you into your new home.
Were you able to get funding for your startup?
Yes, but not as much as we need.
Yes. It is exciting.
How much capital have you raised so far?
How much more do you need?
We feel we will need $40,000 of over head.
Are you looking for investors or loans?
We would prefer investors but we might need to take out a loan.
Who are your investors?
We presented to a few venture capital groups and got $10,000.
Good for you.
Do you know of anyone else?
I know a few angel investors.
I would prefer angel investors over taking out a loan.
I can give you their contact information.
That would be great.
Why don’t you want to take out a loan?
Because I don’t care too much about my equity in the company.
Also, I definitely do not want to pay interest in case things don’t work out.
That is smart.
It’s better to be safe than sorry.
I want to start my own business, but I need ideas for raising the money.
There are many ways to raise money for your business.
What ideas do you have?
Well, first you should look into different start up sources.
I have looked in my community for resources available to me, but have had no luck.
Then you should inquire at your bank for a business loan.
I did try to get a loan from my bank, but they do not want to help me.
Then you should definitely market your idea to a private investor.
I don’t want to rely on someone to guarantee my loan.
Well, if you have a product that you are sure will make money, then look into royalty financing.
What is that?
You will provide the proof of your future sales to secure a loan now.
That is a much better idea, I’m sure I will be able to get a loan that way.
After you have your loan, what else will you need?
I am looking for an office and I am also going to need a lot of special equipment.
You can just lease the items you need until you can afford to buy them.
Well that makes me feel better.
What other obstacles are you facing to raise money for your business?
I’m afraid that once I get started, it won’t make enough money.
Then you should consider selling shares of your new company to the public.
How will that help me?
If more people are financially invested in your business, they will be more concerned about it succeeding.
That is a wonderful idea, but what if I can’t find enough people to buy shares?
You can always look into angel investors, but it will mean giving up a portion of your company.
Well, if they can get my business of the ground and keep it running, it would be worth it.
Good luck with raising money for your business.
Thank you for all of your great ideas.