It takes a lot of money to start a business, and traditional start up business loans are a great start. The problem is, most banks do not make business loans at 100%. They want to see that the entrepreneur is willing to put in something of their own. They want to see an investment that involves more than blood, sweat, and tears.
Basically, lenders want to see potential business owners put their money where their mouth is. The problem for most is that they do not have any of their own money to put in in the first place. Where can one find the funds to bridge the gap between what a lender will lend and what is actually needed to start the business?
It sounds insane to dip in to retirement funds for something so risky, but further review and a closer look reveals that there could be some method to this type of madness. If you have a retirement account, look into the policy on borrowing from it. Many allow loans to be taken out and paid back with interest. The great thing about this is that you are paying the interest back to yourself. Basically, you are borrowing the money from yourself to start your own business, which hopefully will earn you enough to pay back the loan from your retirement funds and then some.
Friends and Family
Borrowing from friends and family is also an option. Loved ones can set you up with awesome terms. The problem is that these types of loans have a reputation for ruining relationships, and not without cause. Be sure to set agreement terms for repayment and keep track of repayment. Removing uncertainty can help preserve relationships.
Whether you sell your boat, sell your house and move to an apartment, or simply put out feelers for investors, a little creative thinking can usually yield funds to help cover any holes left in funding after the bank funds are tapped out. Maybe you have a CD you can tap in to, or a widowed aunt left you some land in the middle of nowhere.
Whatever you do, it is best to know the plan before going to the lender. When you are ready, Biz2Credit can help you find just the lender for you needs. With a network of over 1,300 banks, credit unions, and other types of lending institutions, we offer a list of those with products which fit your needs perfectly. Visit Biz2Credit today for more information.