Fundraising · Investors

Can a small business loan hurt a founders chances of getting additional funding?

Michele Bishop I'm stylist chasing a dream by building a start-up. I am searching for tech and C levels to join me.

Last updated on May 16th, 2018

Funding from investors, etc. Is it a negative?

Lee Hirsch President at Continental Busines Credit

May 16th, 2018

No, i do not believe so!

Dane Madsen Organizational and Operational Strategy Consultant

May 17th, 2018

In most cases, venture investors will ask/demand that the loans get converted to equity, depending on the source. If it is a bank, and it is for specific assets, then those are subject to different treatments. If it is from a quasi-investor who wants to be paid from a venture round, it is unusual that a VC will allow their money to be used to payback early money. Not always, but usually.

Paul Garcia President at TABLE

May 23rd, 2018

It's a matter of priority. Investors will want to know who gets paid first in the case of things going bad. Investors do not typically want to be second to a bank or anyone. They might however use the fact that the bank gave you a loan as a signal that the investment is safer. They may then choose to offer you the money that would allow you to repay the bank loan and only use their money.

Michele Bishop I'm stylist chasing a dream by building a start-up. I am searching for tech and C levels to join me.

May 23rd, 2018

Thank you so much for the feedback....I really appreciate it. The more information/insights that I can gain the better.

Alexandre Azevedo Founder of The Traction Stage Blog & Podcast

May 16th, 2018

Hi, Michele!

Previous funding will become a minor issue for investors as long as you show them some traction. For now, concentrate on validating your business model hypothesis in the fastest and cheapest way and prove them it will be a success. Of course, use you current funding wisely.

If you can show them a glorious future, they won't put so much weigh in past issues.

Wish you success!

Alex