What would you do with a business loan to your site?

First, I'm happy some of you are posting serious comments. Thank you.

I respect what you guys are saying, but let me give another view. And in any case, remember, I'm not trying to sell anything. I'm trying to develop a financial product, and it would only work if there's a real need for this product and if this product actually helps some affiliates (although it doesn't have to help all of them).

It's great if an affiliate can manage their cash flow well, but that's not the point. Take a look at an affiliate who started small, but managed to increase their revenues to 50k/month. suppose also this affiliate has a great site and is operating in a market that has the capacity of much larger investments.
One option, is of course to continue growing internally. That means that if the ROI of the site is averaged by 20% over investment, then they can increase their investment every month by that rate (minus what they're taking home). However, what if the site has the capacity to give 20% ROI or even let's say 15% ROI on 300K? wouldn't you want to take advantage of that potential?
Now, everybody can go and try to raise money. sell a part of the business, bring a partner, and give up control. But if you're familiar with this process then you know that this is a long, painful and expensive process, and at the end you are giving away a lot of the business to someone else.
My point is that if there's someone who is telling you that they would extend the $300K a month for you to get the 15% ROI and they want a small share of that profit at the end of the month then you may want to consider that.
I'm also coming from a home where loans are a dirty word and if someone is an investor or a lender you need to be careful of them. But we haven't even discussed any term of the loan. This is a discussion about the concept, and I'd be happy to get feedback about the concept. just assume this loan comes in good terms, and the lender is also taking some of the risk that things would not go well. would you want to use a service like that?

Thanks again

Fundguy
 


Serious post -

I would not have ever considered a loan in my early going. Part of what made me successful was figuring out the hustle. I had investors available to me from past relationships that I could have turned to for funding but it would have brought in the red tape of any type of partnering. I felt that any type of non-managing partner would have been disastrous for my business. I didn't want any part of the man being in my business. I had an internal drive and vision that I wanted to execute on that a loan (and what it brings) would have killed.

So I hustled, I was able to go to my AmEx after three months of snaking there pay system and get them to give me a 600,000/ limit on my personal card so I could do media buys. I negotiated pay terms with ad platforms based on volume so that I shortened my A/R cycle. I went to advertisers/networks and explained to them that in order to do volume pay terms had to be weekly or damn close to it for them to get the volume. This has allowed me to retain 100% of my company and profit as it has been built out and scaled. And by using AmEx in the beginning it allowed me to get my cash flow in order. By paying it off monthly (actually every few days in the beginning), I really just used them for my float while I racked up huge AmEx points that I used to buy stuff for my business.

I am not knocking the concept totally but in my humble opinion, the guys that are going to take a loan when starting out are doomed to failure. And the ones doing large volume, would be stupid to not figure a way around getting into larger buys and scaling there biz without giving a piece of it to someone.
 
chatmasta said:
serious post:

This idea is doomed to fail. Why? Because anyone who is doing any kind of significant volume (100k/mo+) is doing so because they have superb control over their cash flow. When it comes to scaling campaigns (read: making more money), your job as an affiliate marketer is to bridge the gap between Net 7 payments and Net 3 costs (in the case of adwords), or even bigger disparities in media buys. Once you have mastered that there is really no limit to how high you can scale.

My point is, these successful affiliates do not need a loan to help them. They have great credit and cash flow and unless they are in a real pinch a loan is just unnecessary overhead.
Click to expand...

This.

Anyone good won't need your money, and anyone that needs your money, well, we can't be all winners.
 
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