Small Business Funding Tips You Need To Learn Now
There is a large variety of successful home business that can be hugely profitable in the long term if only the initial obstacles can be surmounted. Perhaps one of the biggest challenges for enterprising entrepreneurs is getting the start-up capital to launch their home business. This is commonly the first and probably biggest boulder to blast away in order to reach the prizes on the other side; its a law of business – Invest to Profit.
So with the biggest obstacle to starting up a home business being raising the cash to get up and going, the first thing most people do is studiously crunch all the numbers to come up with a sum of startup costs and then add in the your own cost of living expenses that will need to be addressed while you make this vital transition. The total you are left with may sound like an impossible pipe dream at this point.
But if it were impossible, why then are so many people starting up and capitalizing on their small home businesses? Where are they coming up with the cash to counter this initial obstacle? Does everyone have a rich Aunt except me?
The fact is, there are many solutions to procuring the financial aid you need to get your dream off the ground and many of them don’t require collateral, just commitment. Following are ways that proactive individuals have used to fuel their home businesses till they can fuel themselves and even pay for vacations in Madagascar…
The SBA Option (Small Business Loans)
The Small Business Loan is often the first thing that comes to our mind when we consider financing our home business, it’s almost a no-brainer. But how exactly will an SBA help a home business start-up and start generating income?
Banks who participate in providing SBLs commonly offer two types of loans to Small Businesses: the 7(a) Guarantee Small Business loan which are the most common choice for small businesses and the 504 fixed-asset small business finance program which offers loans below the market rate. Anyone who hopes to take out a SBL should have a proven credit history, this may not be the right choice for everyone in this regard.
One other point of consideration for SBLs is the fact that both of these programs are primarily offered to businesses that are well into their functioning stages and are already generating some income. Processing the application can be completed anywhere from 2 to 4 months and any amount from $5,000 to $150,000 are distributed to applicants meeting the banks stipulations.
What better way to gain the help you need for a venture than by getting the support of the crowd, and by the crowd I refer to the online community. Many Home Businesses can gain support for their efforts, publicity and the financial aid they need from crowd funding websites like Indiegogo and Kickstarter.
Online crowdfunding allows small businesses to pool their resources rather than counting on the good graces of a single backer. This method of small business financing has become increasingly successful since the JOBS (Jumpstart Our Business Startups) Act was instigated in 2012.
Among the many advantages of crowdfunding is the perk that allows businesses to raise the start-up cash they need to get their business moving without having to sacrifice an equity stake. Other sites will allow fledgling business to take a collection in exchange for products or special deals; others still operate off of an equity-based deal that will ask you for a portion of your company shares.
Sometimes it just takes an angel to work a miracle, it could be a dear aunt or Angel Investors. Many of the big names we hear today like Costco, Yahoo and Google wouldn’t have gotten where they are today without the aid of Angel Investors. Again this loaning alternative is best for businesses past the initial growth stages and the investors will expect about 25 % back on their support.
With Angel Investors home business owners can expect a speedier decision making process handled by an amicable staff. The specialists at Angel Investors look for much more than a cash investment but can also provide their clients with practical pointers and tactical recommendations to ensure their investments will profit. They may even propose a partnership to specific clients.
Product Pre Sales
Another excellent option for gathering a stack of green paper for your home business that many people neglect to consider is the product presale option. Selling products to fund their production is a time honored tradition; in order for such a technique to work it is important to have a working knowledge of the process.
Techniques of pre sales should be well researched and manufacturers will benefit greatly from a intimate relation with their target demographic and the product they will supply.
Home Equity Loan
For homeowners, taking out a equity loan is a good option for financing a home business- this can amount to the total value of your home minus what you would owe to the bank. One of the best things about home equity loans is that they are usually more flexible than other loan options and often offer lower rates as well.
For the savvy entrepreneur who is starting-up a home business a low-cost loan with comfortable flexibility to pay and withdraw as he or she sees fit is a very useful form of support. Obviously, when considering a home equity loan, homeowners are putting their home on the line for their business; this could be excellent motivation for one person and sleepless nights for another.
You must screw your courage to the sticking place if you do choose this option.
Getting the money you need to start building your home business is easier than you think and only requires a proper understanding of your options and there are many not even mentioned here. As long as you understand that financial aid is not as important as commitment and creativity, and you hone those skills, you will go far and be successful.
Enjoy your vacations in Bermuda!