Owning your own small business is the dream of millions of Americans. Unfortunately, getting your business off the ground can be a financial nightmare as you seek to finance your dreams without sinking yourself in debt. While some people manage to stumble into money through a bet paying off or inherited wealth, most people have to find their cash the old-fashioned way. Included here are a few ways to finance your small business.
The most obvious method of small business financing is available through bank loans. Bank loans are often the best option because interest rates can be low and affordable. While lending procedures have gotten more strict in recent years, with good credit you should still be eligible for a loan. Some banks have created loans specially designated for small business investing and should be considered first and foremost.
Utilize Your 401 (k)
Paying into your retirement fund for years can seem like a burden when you aren’t living the life you want currently. Fortunately, with new ways of cashing out your 401(k) you may be able to have fast cash without having to pay exorbitant taxes. This can be a risky business though, because if your business fails you will not only be losing potential income but your nest egg as well. In addition, you should always be checking whether a 401k is the right move for you to go with, this is easy to decide if you are looking for information between the difference of an IRA and 401k from websites like SoFi and this will ensure you are investing your fund in the right option for you.
You may be surprised to know that many people are beginning their business ownership dreams on another person’s dime. With crowdfunding options abounding, many people are finding that their ideas are appealing to many individuals. This kind of funding is especially effective for online business ventures.
Find an Angel Investor
A great way to fund your small business can be through angel investing. While it is critical to hit the three main requirements of being succinct, avoiding jargon and having an exit strategy; a few other tips can help you be more successful at securing an investor.
Add experience to your team, create a genuinely original idea (or something you are passionate about), and have a good understanding of the industry you are entering. All of these things will help you secure an angel investor who is excited about you and your company.
Call on Your Friends and Family
Fortunately, your friends and family are there in your life for much more than just prying questions and drunken family dinners. Your closest loved ones should be your greatest cheerleaders and willing to support you in your endeavors. While they may not all have extra funding for your dream business, it doesn’t hurt to ask. Be sure you repay all loans to family with whatever interest is fair so you don’t ruin relationships in the process.