Business Loan for AM? (28)
Just wondering if anyone has tried to take out a business loan for AM... is there a good way to prove to a bank that this is worth their risk?
I've made 200/day last year but nothing much aside from that.. I'm down to my last grand and was thinking about applying for a small biz loan. Any thoughts?
How about credit card?
Yeah actually I forgot to mention that grand IS my credit card.. haha
Not sure if a loan is a good idea. It would put too much pressure on you and won't allow to spend enough money to make good decisions.
What about doing some random job to save some money and work on SEO / AM during the nights afternoon?
That would put you in a position where even if you lose it it won't affect your day to day life.
Originally Posted by bbrock32
I would suggest that you AVOID Loans, unless really necessary which is not the case here, else you wouldn't be asking. Do other stuff to earn the money, then invest.
Originally Posted by jeffs8914
When banks consider extending business loans, they are primarily interested whether they will get their money back and how they can reduce their risk by collateralising the loan against business assets.
Given this, if you are running your business as a standalone one person affiliate, I would say your chance of getting a business loan is pretty close to zero.
Thanks guys, I pretty much know what I have to do but I'm not motivated enough to go into SEO because of dumb algorithm changes and I'm not tech savvy.
Is SEO really an option still for newbs in that area?
Don't do it.
..as much as i love AM, and tell people all the time it's worth spending their own money. It's not worth risking being in debt. I actually wouldn't risk being in debt for most businesses ideas unless it's a magnificent one.
Build up your own cash flow, then get back to AM.
Debt sucks and affiliate marketing isn't guaranteed.
Thanks stackman, but you're being waaay too logical for me.. haha
Guess I'll save up and be back next year.
haha logic is good when it comes to $
Don't do a loan, but you could go find a sales job where you HUSTLE... and make quite a big pretty fast, then get down to AM!
If you have useful skills you could easily make $200/day freelancing or working as a consultant / contractor for existing companies.
Do that for a short time while you get back on your feet and test campaigns on the side. Once you get some traction look to refocus more time and energy on campaigns.
Originally Posted by stackman
i started out just a few years ago with $25 on POF, and only had about $300 total to my name. I've generated millions in revenue with that $25, so not having enough money is not an excuse to fail at AM.
You might be exception, not the rule.. that's insane. I'm going into a new traffic source/niche so I don't think $25 will help. I appreciate your optimism though.
Originally Posted by stackman
I'm not sure what percentage of university students get loans. But I'd say A LOT. They get loans because they want to invest in their education. In theory this will increase the likelihood of them getting a job, which will bring them income. But in the end, there are no guarantees. There are no guarantees your degree will count for anything. There are no guarantees your degree will bring you a job.
With that being said, how is getting a loan in affiliate marketing any different than getting a loan at university? In both cases you are investing in your education. In both cases there are no guarantees in terms of income. (obviously it's close to impossible to get a loan for AM, but if you could?)
I was taught debt is good IF you invest it in something that will grow in value or generate a long term income. It's not all bad!
Very good point, indeed!
Originally Posted by Mr Green
I think you are confusing two very different financial products: a business loan (a loan made by a bank to a limited liability business) and a personal loan (a loan made by a bank to an individual with full, unlimited liability)
I don't know any bank that would give a standard business loan to a one-person affiliate marketing business.
If you could get a business loan for such businesses, everyone would be doing so:
Step 1: Incorporate a limited liability company
Step 2: Convince HSBC to give the company a $50,000 loan
Step 3: Spend all the money on media and either A) make amazing profits or B) make a loss
- If A) Pay back bank and then pay yourself a nice dividend with the cash left over
- If B) Put the company into insolvency, you lose nothing, and bank takes a $50,000 loss
You can see here that the bank is taking on all the risk, while you take all the upside.
All the stuff that make affiliate marketing attractive for an affiliate (e.g. asset-light, limited barriers to entry, high volatility of earnings) are what make it highly unattractive for a bank.
When a bank makes a business loan, they are looking to minimise their risk as much as possible, so they want businesses to have real assets (e.g. factory, equipment etc.) against which they can collateralise the loan, and they want the business to be in an industry with limited barriers to entry and with predictable earnings.
The only way you would convince a bank to make a business loan would be for you (or your rich daddy) to personally guarantee the loan with full recourse, in which case this is not really a business loan.
^^ Sorry I probably didn't write it in a clear way.
I do realize the likelihood of getting a loan for AM campaign is extremely slim.
I'm not saying get a loan to directly build an affiliate business and make money. I'm saying get a loan to educate yourself in AM. The goal isn't to make money but learn the processes.
Haha this conversation is mute anyway, bottom line AM = You're not going to get a loan, whether it's good or bad thing for you.
Originally Posted by Mr Green
That completely eliminates the downside of taking on the loan. It's the least aggressive form of financing you can get.
If you were to rack up a similar amount of money on credit cards or personal loans, the lender doesn't care if you're out of work. He'll take your possessions instead.
This is something I try to explain to whinge-machine students all the time.
Student debt isn't really debt (in the UK at least). Taking out a 30k student loan for a career that might be worth an extra 10/15k per year in earnings over the course of a lifetime without having to pay the loan back while you're out of work... that's a decent deal.
Anybody who sniffs at it should try getting any other kind of financing!
Originally Posted by jeffs8914
So don't go on that, but it does show how sometimes you can hit some big campaigns with ease. I know i did when i started too.
@allthegold had the best plan though: FREELANCE YOUR ASSS OFF AND SAVE SOME $!!!
Originally Posted by jeffs8914
I was just trying to prove the point that if you want it bad enough, you will find a way to make it work.. regardless of the amount you have to initially invest.
That said I'm still with Sir Stackman's original point; Debt sucks and affiliate marketing isn't guaranteed.
Thanks guys for all the ideas/opinions.. I have a deep love/obsession with AM so I doubt I'm going to quit anytime soon but I WILL MAKE IT no matter how much I need to save or sacrifice.
If you have good past expirence it should be easy for you to raise money no matter what you are doing..
I got a smart money from investor(math professor) 200k$
Its only because
1)They gey knew me before (I worked for his startup for 4 years..)
2)I showed him real results
The funny thing is I didn't even asked for money, he just offered it..
Really don't regret it.. I learn a lot from this guy both lesson for life and both analytics..
I know a company who does media buying funding if you're interested. They also do daily affiliate payouts to keep your cashflow tight.
Originally Posted by aermud
I financed my way through AM but:
- My income was around $150k net
- I knew exactly what my risk threshold was and what the timeline would be to repay the debt if I didn't make it work
- I knew exactly the impact the debt would have
- I structured how I managed the debt to make sure it didn't destroy my internal psychology
- I was methodical in my approach and spent the time to learn and understand what data could do and what really shifted the needle
- I quit throwing shit at the wall pretty quickly and got focused
- I documented everything (not for everyone but it does help find clarity).
- I was already working in paid traffic but nothing can really prepare you for the AM world - it's just a different beast.
Mr Green is bang on in terms of how you should consider investing "growth debt". No disrespect to the art community, however I'd put $50k into AM before a fine arts degree. In fact if you want to do nearly anything in business all the degree *might* do is give you a shot at an interview. From there it's about as conducive to your growth as... a $50k debt. The real world is a very different place. I know how I'd rather spend that money and 4-5 years of my time.
You can be as sure as shit from one angle though - you're not getting financing through a business loan unless you already have something tangible that has the capacity to float the risk (an existing business with real revenue).
Entering the AM world via debt isn't for everyone. In fact it's probably only for a small % of people that fit the right profile. It's on you to know your risk at an absolute base line. But if your risk and capacity to service the debt extends only to a couple of grand I'm sure you can hustle hard elsewhere to make the money. Nothing wrong with a test of endurance 
I'd love in into!
I'd love in into! @aermud
I would suggest financing through credit cards. If you have a good relationship with your banker and revenues to show you can go for a commercial loan. If you just need quicker payouts you can look into using a factoring company. If you have a good relationship with richer people than yourself then you can ask for a loan. If you also have a bigger vision you can sell equity in your company.
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