Sometimes the hardest part of starting your own business is to come up with the large amount of capital that you will need to get started. You have the idea for the start-up, but the capital can be another hurdle in getting your ideas off the ground.
We all know that there are traditional ways to get capital like such as mortgages and loans. If you don’t qualify for traditional methods of investment, there are other alternatives as well. The following are some of those alternatives:
Bootstrap It:
You can always start with minimal cash and assets and improvise your way through the start-up process of your business. This method allows you to maintain 100% ownership of the business and not give any of the value of your business or control of it to someone else. When you own the business completely you can make the decisions that best suit your desires and needs, rather than having to talk with someone else before doing anything with your business.
Refinancing:
You can refinance your home in order to get a new mortgage on it. Be sure that you aren’t paying too many fees that aren’t too high or the interest rates are not astronomical. This lets you use the equity that you have built up in your home to invest it into your startup and get your business idea off the ground.
Home Equity Line of Credit (HELOC):
A HELOC is a loan from the same institution that your mortgage is from. It allows you to borrow and take as much money out as needed when you need it. HELOCs are usually at a lower interest rate than traditional mortgage rates and the lender sets up the maximum that they feel is appropriate to let you borrow.
Family & Friends:
If family and friends are in the position to help you or go in with you on investing in a business, then this may be a great way to go into business with a business partner or partners. If you just borrow money from friends, you might find them a lot more lenient than renting money from a bank or other financial institution.
Personal Credit Cards:
Many small businesses use credit cards, although it may not be highly recommended to use them to cover start-up costs. If you have a credit card with a high limit on it, you may use it as a business credit card, but it’s recommended to wait till your business is up off the ground first.
Business Loans:
If you qualify for a traditional business loan, then that may work for you as well. Using a bank loan can help if the bank is willing to lend your business a loan, otherwise you might have to look elsewhere. Many banks are not interested in helping a startup as the risk is too great.
SBA 7(a) Loans:
The SBA 7(a) Loans are given to businesses that are reasonably stable and have proven that they are not a huge “risk” to loan money to. These are loans for owners who have invested their own personal wealth into their business.
When you are starting up a business, you might have to be innovative to get the capital that you need to get your startup off the ground. However, there are many ways to be innovative and make the money that you need in order to get yourself started up.
For more information on how to fund your startup, please feel free to reach out to us. We are always here to help!