Starting up a new business can be one of the most exciting and daunting decisions that you’ll ever make. You’re excited because you have a brilliant idea and the energy to make it work. You have also done your homework and know that there is a gap in the market to sell your products or service.
On the other hand, start-ups are daunting because they require loads of hard work and financial resources. To make it easier, here are several financing options.
Bank loans for start-ups
Banks will typically only loan money to start-ups that have been running for some time. If your business has been operating for over six months, you may qualify for a bank loan. Get all your business accounting records in place, and take six months of statements to the bank so they can decide if you’re a good risk.
You can also usually apply for a bank loan online. Your chances of success are better if you apply at the same bank which you use for your business. If they don’t approve your loan, try another bank who is willing to take a risk on your business talents.
Crowdfunding for start-ups
Several crowdfunding platforms are available on the internet, which focus on start-ups. Investors are always looking for good places to grow their money. Present an enticing plan online (without revealing too much), and you could attract the financial resources need to jumpstart the next big idea.
Some platforms are free of charge, while others require payment for the right to place your idea online. Do research to find the right platform for your business financing.
Credit cards are an option
You can always check the status of your credit cards as a potential financing option. Your financial needs will have to be weighed against the risks of using this option. Interest rates are typically quite high, and you run the risk of damaging a good credit score if you can’t make the repayments.
Also, unless you know that your business will be able to make minimum and more repayments every month, this could be an expensive choice in many ways. Only use this option if you are certain you can afford these risks and this decision will be highly beneficial to your business growth.
Sell an annuity
If you have any annuities available for sale, make an appointment to see a financial adviser. You may be surprised to learn that this is a reasonably quick and secure way to finance your start-up. Your adviser will provide you with several options related to lump sum or portion payment payouts.
Advice will be based on whether the annuity is free of earlier sales, is up to date, and its dollar value together with other elements. Once the basics have been sorted, the adviser will use a structured settlement calculator to inform you of your options. You can then request a free quote and decide if this financing model suits your business goals.
Dip into your 401(k)
Your 401(k) may be an option if you’re unemployed and need financial backup to get a business started. As with the credit card option, this one also carries high risks. One positive about this financing source is that you can borrow against savings without fear of paying any penalties.
You’ll need expert advice to retrieve funds to achieve this goal, though because you will need to register a C Corporation. Also, a specific retirement plan will need to be established in which to transfer payment. If you’re successful, you’ll be glad you made this choice. If not, you will lose your retirement funding and your business.