Alternative Funding

An anonymous poster left a post (here) on my site which partly stated:

“….if you had a business degree, then it would possibly be easier for you to obtain financing to finance your entreprenuerial dreams.”

Perhaps a guy in a suit who lives at the bank from 9am-5pm might think a simple business degree makes me a better entrepreur, but there is a way around this. Here are a few of the people I have met who have become extremely successful without the initial help of a bank:

  • James Flores – CoFounder of Ocean Energy – He started his oil/gas exploration company when he had no money. He borrowed from family friends and maxed out close to 30 credit cards totalling over $120,000 at 26% interest.
  • Robert Sek – Started an internet company with a relatively small investment. Rapidly grew his company and used the profits to invest in larger ventures.
  • Tim League – Founder of Alamo Drafthouse chain of movie theater/resturants. Needed several hundred thousand dollars to convert a parking structure into a movie theater. He used his $50,000 of savings, his wife convinced her parents to re-finance their house, they got a small-business federal loan (which almost anyone can get) and they maxed out 26 different credit cards.
  • Family Friend 1 – Built up small savings from working, then started buying/selling condos. From there he has moved onto multi-million dollar commercial properties and full apartment complex’s.
  • Family Friend 2 – Was working an everyday job when he landed a small government contract for an environmental cleanup. Reinvested profits and the business grew into a multi-national environmental cleanup corporation with operations in almost every state in the U.S.
  • Family Friend 3 – Worked an engineering job for many years, intelligently saved his money and bought his first piece of commercial property. He now owns a highly successful real estate company.

As you can see, the bank did not play a crucial role in the beginning of these lives. In a case such as Tim League’s, I think his borrowing methods actually drove him harder to succeed. If he didn’t succeed, he would have lost his family money, lost his savings and absolutely obliterated his credit score.

So even if a business degree can make you more qualified for a loan, there are always ways around it.

Blog posted on: April 11, 2005

16 comments on “Alternative Funding

  1. Maxwell

    A good friend of mine bought, renovated and sold his first investment property by maxing out 7 credit cards.

    Thought he had gone insane, but it ended up paying off! He now has sold over 10 homes.

  2. Cap

    I think the poster meant that having a business degree might educate you further on your financing choices/options, not help you qualify more for getting some loans. I could be wrong though.

    your degree shouldnt factor much at all in most kinds of loans, business credit or line of credits. your credit worthiness such as your credit score/FICO score, income level, the lender’s own policy and formula matters more than degree (or lack of degree) in obtaining loans to start a business.

    either case I think a business degree (almost any type) would help in being an entrepreneur, but its hardly necessary requirement to be a successful one. I think other factors suchs as your own personality/characteristics have a lot more impact..

  3. Manny

    Maxing out 30 credit cards? You must be very confident your business will succeed or you’ve just sold your life away and your soul to those credit card companies.

    Risks. I love ‘em! =)

  4. Anonymous

    You missed the point of my comment. The degree is nothing more than a piece of paper. What I was responding to was your flippant comment that you don’t need to learn anything in school about business.

    And what made me think that a business education might help you was your water experiment. I’m still not sure that you have drawn the correct conclusions from the exercise….which would not be a concern if you were a high school freshman, but as a college senior who fancies himself a businessman, I was expecting more from you.

  5. Johnie

    I agree with the previous anon. A business degree or courses in business would have helped a little in your water experiment. I’ve brought up my comments about that experiment in previous comments. I’m just wondering what “anonymous” thought you might do differently or the conclusion that he would have come up with in that experiment.

    Back onto the question about an MBA/business degree. From talking to a lot of my MBA friends, the most important thing about getting an MBA is not necessarily the courses that you take but rather the network that you build. It is also about being surrounded by like-minded individuals. The success of an entrepeneur is greatly influenced by the people that he knows. Nev, in your own post, look at how many people borrow from their friends and family. Those are also people in their social network.

  6. jim

    As an old adage goes, “You don’t know what you don’t know.” There are many intricacies in any business you go into that the knowledge learned during the pursuit of an MBA might teach you. The lessons you learned in the classroom of life (the water experiment) could’ve been learned faster and cheaper in an actual classroom (if the stakes were much higher of course).

    I agree with the Anon posted who was a little put off by the outright dismissal of the degree but I do believe an MBA is only as valuable as you make it. It’s not necessary for success but it does help.

  7. Neville

    Thanks to all for your comments, I always encourage your feedback.

    I didn’t intend to sound hostile towards a business degree or MBA, I was just trying to make the point that it doesn’t necessarily make someone a better entrepreneur. It may make them more adept at crunching the numbers behind a large business, a very important skill.

    It is interesting how pretty much every successful person I know does not have a business degree. NEEDLESS TO SAY there are obviously tons of successful people who carry a business degree in their pocket.

    While maxing out their credit cards, Tim League and his wife actually had plans to move to Mexico in case things didn’t work out. It was an extreme risk they took, but now they run a burgeoning business that has already set them for life. Plus, risks are just damn fun :)
    Just look how popular Vegas is.

  8. Joshua Estrin


    If you were in AA they would say take what works and leave the rest behind.

    As a business consultant and strategist I have the Columbia degree SO WHAT!!!

    I am 35 and often told that is obviously too young to be in a position to give advice to anyone older or with more experience.

    I see the world of business from two sides and neither is right or wrong, better or worse.

    We have the traditionalists and the rogues (wink)

    What is most intriguing is that the first thing my foo foo Ivy education taught me was the P in profit and the L in loss

    So, success can be measured in many ways and the real proof is can you make success stick?

    In all your ventures I have followed you have turned a profit.

    $1, $10 1 million dollars who cares…profit is profit and you have found a formula that works….

    Perhaps your way is not THE way, but it IS YOUR WAY and it has proven to be empirically sound…

    Make your mother happy and finish school and along the way pick your nose, pick a few brains but just keep walking the high road and

    Here is a BRAVO out to you!

    Joshua Esstrin

  9. Joshua Estrin

    You are something else a force to be reckoned with and someone to keep an eye on and out for!

    You certainly have an instinct for what is fresh and new and you know how to make success stick.

    Each time a read a post you have a goal and the fact that it may or may not appear feasible to all is not the issue you know your audience and your market and you take calculated risk with ample resources.

    You have also taken

    the blog to new found fame.

    Never since my postings regarding Martha Stewart and Tyco have I seen such blog madness at my site.

    Keep stirring the pot and keep in touch

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