10 Creative ways to finance your small business – Part 1
Baby boomers are in a unique position in financing business startup and growth. We have more assets than we did in our 20s and 30s, and we’re more secure in our ability to do what it takes to make a business work. But there are still many challenges, particularly when it comes to funding that business idea for growth or startup. Sure, you can always try to borrow money from a bank, but in many cases the bank isn’t interested. We have listed some creative, ways to fund your business idea. The first five are listed today, with the rest to follow tomorrow.
1. Credit cards – scary, possibly expensive. If you have good credit, try to find a cc with low interest. Forget the airline miles unless your business will involve lots of travel. It’s been said that half of startups are financed by credit cards. Use credit cards only as a last resort, and only on a temporary basis. Getting behind with a credit card can mean that your personal credit takes a big hit, in addition to causing financial problems for your business.
2. F&F – friends and family. These loans can be “off the books” so they don’t affect your credit rating. But they can be the scariest form of financing – you don’t want to lose your good relationship with Aunt Marge because you didn’t pay back her loan fast enough.
3. Cash value of life insurance. The cash value is not the death benefit (you won’t need the loan if you die!), but it’s the value in the insurance policy that has built up over time in excess of the premium. Cash value is only present in whole life policies. If you have an old whole life policy hanging around, you might want to look at it to see if there is any cash value built up.
4. SBA – take advantage of one of the new loan programs, like the Patriot Express loans for veterans, or the Rural Advantage program for small businesses in rural areas. Find information about these programs on the SBA website (www.sba.gov)
5. Take out a second mortgage. If you’re like most baby boomers, you have a home that has equity built up. Take out a second mortgage to finance your business.
5 Comments
Another option to creatively finance your small business is equipment leasing. It is typically easier to qualify than a bank loan. In addition there are tax benefits http://www.crestcapital.com/tax_deduction_calculator like Section 179 that a small business owner should take advantage of.
I checked the calculator above to see what the savings would be for a new computer for my business, and I was very impressed by the savings All of us need to consider this by the end of the year.
Thanks.
Yes. Whether you finance or pay cash, Section 179 is a powerful tax strategy. It applies to equipment, furniture, software, and even vehicles (with some restrictions). If you’re even thinking about a capital purchase in the near future, it is wise to consider doing so prior to the 31st to take advantage of Sec 179.
[...] But, having good credit certainly helps get you that business loan. It helps because the higher your credit rating, the lower the interest rate on your startup loan. If your credit rating is low enough, it might possibly be denied credit by major banks and credit unions. You can still find money for your small business startup from other lending institutions, at higher interest rates, or you might need to go to other more creative financing sources. [...]
For hundreds of ways to finance your startup go to the http://www.antiventurecapital.com/.