How to Own 20% of Multiple SMBs

My loan payments are higher for 10 years. Whereas if I get as a line of credit I can use it and if I can pay it off six months later I only paid interest for six months and now the interest is gone. So I, I knew I had enough with the line of credit.

Like the math was correct, I only used half of it so I still had like the rest in case of the pinch thing but it also made it so now where I'm at today like yes it kind of washed the first year out but now for the next nine years of this loan every payment smaller my overall interest payments are going to be way smaller and I'm not paying any interest anymore because the line of credit zeroed out…

It's gonna set me up for better success later. It sucks while it's happening, though. It's not like a fun thing when like every, you get, maybe you get 10k in profit that month, but it's right, the line of credit, like paying it off like next month to the line of credit.

And that happened for six, seven months until I cleared it. And now, but now I don't have any more interest now. My loan payments are lower now every month going forward.

I might save $1,000 a month or whatever the number would have been. I don't know the math, but might save 1,000, 2,000amonth every month for the next nine years because I chose to do it that way. So that's my thinking on it, at least. It's not that there's a right or a wrong way, but.

Well, and, and I think great pushback in point. I think basically you could, you could run a model and kind of assess what the cost was to you in that first year. I mean, there was a real.

And I guess my point is there was a real cost to doing it this way of having to kind of figure out a way of using that line of credit to build up working capital reserves. It was, there was, there was a real cost to that. And so you want to weigh that cost against your savings of not having a big working capital chunk put on the balance sheet that then becomes part of your SBA loan that you're…

And so you could, I don't know what that math is, but you know, you could, you could do it. And I guess you kind of in your head or your instinct was that it was going to be cheaper in the long term to build up working capital reserves on your own as opposed to borrowing to build up balance sheet working capital that you're going to have to pay interest on for 10 years.

Yeah, yeah, I did the math and it was cheaper. It's just less optimal because then you don't get to pay yourself as much for the first year. But I was okay with that to pay myself more the next nine.

So, yeah, it's, it's partly math. It's just an equation, and it's Also a little bit of like, do you want money now or later? What's more important to you?

But yeah, well, and the other point to Evan would be line of credit is not versus working capital. You want both.