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Once you've figured out how much money you'll need to get your business going, it's time to look at how to get it. If you have savings to cover the gap, you're all set. Put it in a separate account right away, so it's clear that the money is for the business. If you don't have savings, there are basically two ways to get the money. Either sell stuff in the usual way, or take out loans. You could also get the money in forms that you don't have to repay, such as, gift sponsorships or grants, but by and large, loans are the biggest source of startup funds for freelancers.
Institutional loans are straightforward, but they can be hard to get. Loans are likely to either be from friends and family or from credit cards. Each source has its advantages and disadvantages. In either case, work the figures into the funding spreadsheet, to figure out your monthly payment. Friends and family is a group that includes any individual that makes a private loan or investment in your business. The advantages are that the loan is specifically for your business; it's sized to your needs and such loans usually have simple terms.
On the other hand, the money comes from an inexperienced lender, so you'll lack such nice at ease as a monthly statement. The lender might also want things besides money, such as free work or a piece of the business or a control over how it's run. If such a loan goes wrong it can ruin the relationship you have with that friend or family member. Credit cards, on the other hand, have their own pluses and minuses, as do credit card like loans, such as equity lines of credit. On the plus side, you can borrow as little or as much as you like, the lender is well regulated and professional, and monthly statements make repayment clear, while automatic deductions make it easy.
On the minus side, there's no chance the credit card company is going to give you a break for long, unlike say, your Uncle Arthur. Credit card loans can be expensive with both high interest rates and big penalties if you miss payments. Finally, having ready access to a variable amount of cash can ruin you if you're not disciplined. If you do decide to borrow from credit cards, I recommend you use one specific card and only take out one loan on it. It's possible that you will get an institutional loan or make some other arrangement. But whatever route you take, figure out what the repayment plan will be and budget for it, including interest.
This is part of the calculation on the funding exercise file. So, now you know how much you need to borrow, and how much you have to pay back each month. It might seem intimidating, but making such arrangements is necessary to pull together enough money to stay in the game until business picks up.
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