People everywhere are operating their own business from their homes. Working and earning a living from home really can’t get much more convenient than this, and you may already be dreaming of it and making plans to start your own home based business.
In order to help you start your own home based business, here are 10 ways you can get money for it.
1. Use Your Own Money
If you have money saved up that you can use to start a home based business, this really is your best option. You can use cash that you already have in savings or investments.
Another option is to get cash from an IRA or other retirement savings account, but you certainly do not want to use all of it. You should leave some money in it because if the business fails – you won’t be able to retire.
When using your own money for a business startup, you need to be sure to have an additional cash reserve in order to pay bills while you are getting it off the ground – which could take several months.
2. Get a Personal Loan from a Bank
One of the most common ways to get money for a new business is to take out a loan for it from your bank. You can get a personal loan if you do not need a lot of money and if your credit score is good.
In order to get larger amounts, you will need to have some collateral. A bank will give you a personal loan much faster than it will give you a business loan.
3. Get a Small Business Loan from the SBA
The US Small Business Administration (SBA) exists to give new business startups money to get started. They do not loan you the money themselves, but will provide a guarantee to your bank in the event you should default.
Lenders like having the guarantee, and the interest rates on the loan are better. Individuals who get SBA loans, however, have to personally invest 20% of the cost of the startup, and the SBA will also require that the lender secures collateral for the loan.
In order to apply for an SBA loan, you will need to have a complete business plan and good credit.
4. Get a Business Loan from Your Bank
This may or may not be an option that is available to you because banks are not giving a lot of loans today for new business startups. Part of the reason is that so many new businesses fail, that they will be reluctant to help you.
If you want to try, you will need a well prepared business plan, and be sure that you can prove you know what you are doing. Most likely, you will need to talk to a number of lenders before you find one that is interested in funding your new business.
If this should fail, consider getting a personal loan, or check out the other options in this article.
5. Borrow the Money from a Relative or Friend
Borrowing the money you need from a friend or relative can be an easy and quick way to get what you need for your new business startup. This can work especially well if you are willing to make them a partner in the business.
Sometimes older relatives are more than eager to help if they think you have a good business mind and are energetic, and having a solid business plan will impress them.
Doing everything right like a business will also help; which means choosing a business structure, getting the right licenses, obtaining a tax number, etc.
A strong reason to get this kind of loan is that it may be possible to get a zero interest loan from them. If you decide to use this option, be sure to put it all in print first.
6. Put It on a Credit Card
Certain business startups are not going to cost very much – especially if you are starting a business that is online only. If you have a good amount of credit available, then this could give you the money you need instantly.
The thing you need to watch out for when you do this is the interest rate. Ideally, you would want a credit card with zero interest for a year to fifteen months, and then it would give you low interest rates after that.
7. Borrow from Your Home’s Equity
If you have been living in your home for some time then you will have some equity built up in it. This would be the cheapest type of loan you could obtain from a lender. It would give you a low interest loan that you could pay back slowly.
A problem with this, however, is that your home is at stake if you should forfeit on paying it back. You could also get a home equity loan which allows you to take out only what you need.
This reduces your interest payments because you will only pay interest on the money you have actually used, but then you also have more money available in the account if you should need it.
8. Raise the Money on KickStarter
KickStarter, and other websites like it, helps people raise money for various projects. Business projects are simply posted online and others provide money for the business ideas that they like.
There is no need to pay the money back. At present, more than $1 billion has been given to various projects through the website. You simply set a funding goal, and when it is reached you get the money. If it is not reached, the money is returned to the donors.
9. Get a VA Loan
If you are a veteran, the VA offers special loans to veterans. A powerful advantage that veterans have is that starting January 1, 2014, small business loans for veterans have zero fees attached to them up to $150,000.
The loans are actually given through the SBA, but the VA works with them to ensure you get the special benefits.
There are several loan options that are available. There are also special loans available for disabled vets and for women who were in the military.
10. Venture Capitalists
Finding a venture capitalist who is interested in loaning your business the money it needs to get started is an excellent way to fund your new business. These “angel investors” know what they are looking for and they are not always easy to find.
However, you must generally be willing to sell your business to them in about five years, or be able to at least prove that you are sure you will make a good profit from it. They are looking to make profit and they will not risk their money in a situation they are not sure of.