“The rich ruleth over the poor, and the borrower is servant to the lender.” — Proverbs 22:7
Lesson
What You Will Learn
- Compare common funding sources for very small businesses
- Recognize predatory loans and business scams
- Explain general categories of help for returning citizens, including microloans, community lenders, and grants
- Choose a funding plan that matches the startup budget
Lesson Notes
Start With What You Have
The safest funding is personal savings and profit reinvested from early sales. Bootstrapping is slower, but you own what you build. If family or friends help, put the terms in writing; unclear loans can strain relationships.
Responsible Outside Funding
- Microloans: small loans, often from nonprofit lenders, usually with coaching.
- Community lenders (CDFIs): mission-driven lenders serving people banks often overlook.
- Grants: do not need to be repaid, but are limited and competitive; some serve returning citizens or women. Read every requirement.
- Re-entry and community programs: some nonprofits and churches offer seed funds, equipment, or training.
Local options: ________________ (Instructor will help fill in.)
Recognizing Predatory Debt and Scams
The borrower is servant to the lender (Proverbs 22:7). Be cautious of:
- Payday, title, and high-fee cash advance loans.
- Lenders who rush you, hide the total cost, or won't put terms in writing.
- "Opportunities" requiring big upfront fees or inventory, or paying mainly for recruiting.
- Anyone promising guaranteed grants or loans for a fee.
Ask: What is the total I will repay? The APR? What if I pay late? Can I have it in writing and time to decide?
Making a Funding Plan
Match funding to your startup Needs from Module 6: How much do I have? How much can I save monthly? Could I start smaller? Can the business repay a loan from profit?
Monique needed $400 to start pet-sitting. Instead of a payday loan, she saved for three months and bought supplies from her first earnings. (Monique is a composite example.)
Key Terms
| Item | Details |
|---|---|
| Bootstrapping | Starting with your own savings and growing from profit |
| Microloan | A small business loan, often from a nonprofit lender |
| CDFI | Community development financial institution; a mission-driven lender serving underserved communities |
| Predatory lending | Lending with unfair, deceptive, or extremely costly terms |
In-Class Activities
Spot the Red Flags
Read the six funding offers on the worksheet. For each, mark it Safe, Caution, or Red Flag, and write the reason.
Funding Ladder
Using your startup Needs total from Module 6, build a funding ladder: what you will cover with savings, early profit, and (only if needed) a responsible outside source. Write how long it would take to save the amount.
Assignment: My Funding Plan
Write a one-page funding plan:
- Your startup Needs total.
- How much you can save each month and how long it will take.
- Which responsible funding sources you might explore and where you would ask (use general categories and the instructor's local list).
- The questions you will ask before signing any loan.
- Two red flags you will avoid.
Graded with the Module Assignment Rubric.
Reflection Journal
Proverbs 22:7 says the borrower is servant to the lender. God wants His people free. What has debt cost you or people you love? What would it look like to build slowly and freely, trusting God to supply your needs (Philippians 4:19)?
Prayer focus: Ask God for patience to build without bondage and discernment to recognize offers that would harm you.
Weekly Reading & Devotions
Free to Build
The borrower is servant to the lender. Proverbs 22:7 is not only about money; it is about freedom. Heavy debt can make a business owner a servant to payments instead of free to serve customers.
Some lenders target people who are desperate or have been shut out of banks. Payday loans, title loans, high-fee cash advances, and "guaranteed grant" offers that require an upfront fee can trap a new business before it begins. A real opportunity will give you clear written terms and time to decide.
There are better paths. Saving a little each month, starting smaller, and reinvesting early profit are slow but free. Nonprofit microloans, community lenders, and some programs for returning citizens offer small amounts with coaching. Grants exist but are limited and competitive; read every requirement.
Dee was offered a quick loan to buy a full set of salon equipment. Instead, she rented a chair part-time, saved from her earnings, and bought her equipment piece by piece. It took longer, but she owed no one. (Dee is a composite example.)
Think About It
- What has debt cost you or people you love? ______________________
- How long would it take you to save your startup Needs total? ______________________
- What red flag will you watch for most carefully? ______________________
Daily Devotions for Week 7
Servant to the Lender
The rich ruleth over the poor, and the borrower is servant to the lender.— Proverbs 22:7 (KJV)
Debt can take away freedom. God wants His people free.
Reflect: Where does debt limit your freedom?
Pray: Lord, keep me from bondage.
Do: Write two red flags you will avoid.
Owe No Man
Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.— Romans 13:8 (KJV)
The only debt Paul encourages is love. Freedom from debt frees us to love.
Reflect: What would you do with freedom from debt?
Pray: Lord, make me free to love and serve.
Do: Pay or plan to pay down one obligation.
Consider the Ant
Go to the ant, thou sluggard; consider her ways, and be wise:— Proverbs 6:6 (KJV)
The ant prepares in season. Saving little by little is wisdom.
Reflect: What could you set aside each week?
Pray: Lord, teach me to save wisely.
Do: Write a weekly savings goal for your business.
He Shall Supply
But my God shall supply all your need according to his riches in glory by Christ Jesus.— Philippians 4:19 (KJV)
God is your provider. You do not have to grab at offers that harm you.
Reflect: What need are you trusting God to supply?
Pray: Lord, I trust You to supply my need.
Do: Thank God for one way He has provided this week.
The Righteous Repay
The wicked borroweth, and payeth not again: but the righteous sheweth mercy, and giveth.— Psalm 37:21 (KJV)
If we borrow, we repay. Integrity in debt is part of righteousness.
Reflect: How will you make sure any loan can be repaid?
Pray: Lord, make me trustworthy with money.
Do: Write three questions to ask before signing any loan.
Module Quiz
- 1.
Bootstrapping means:
- 2.
Which is a red flag?
- 3.
A CDFI is:
- 4.
Grants must always be repaid.
- 5.
List three questions to ask before signing a loan.