A home business can start small and grow into something larger than life. Some juggernaut brands that started as a home business include Facebook, Yankee Candle, and Harley Davidson. The possibilities are endless, but you need the funds to make your dream a reality. See these five ways to finance your home business.
5 Ways to Help Finance Your Home Business
The average cost of a startup is $30,000, but that varies based on the business and your resources. You need to have everything you need to set yourself up for success, so you need to accumulate the money before starting your business. Here are five ways to finance your home business.
1. Private Small Business Self Employed Loans
A small business loan specifically designed for people who work from home can take you to the next level in your career. Some of the benefits of self employed loans include:
- opportunity to build your credit
- access to funds
- no bank statements required
- keep control
- select from a variety of vendors
Naturally, you need to pay off your loan in time, but you will have a clear repayment schedule to keep things simple. You will also have a professional advisor to guide you throughout the process to help you make the right decisions for you and your new business.
2. Federal Small Business Loans
The US Small Business Association (SBA) helps small businesses by offering federal loans, business counseling, and access to federal contracts. You can get self employed loans that meet specific SBA requirements or disaster loans when your business faces a crisis, such as a pandemic or natural disaster. Most federal loans offer much lower interest rates than private loans, and you may even qualify for forgiveness for certain loans. Of course, you will not get the personal touch you may receive through other financial institutions. You may also have to adhere to stricter qualifications.
3. Personal Funds
You may have managed to save up some money up to this point. While you probably enjoy the security a nest egg offers, you should consider using your personal finances to pay for your new business. You will not need to pay anyone back with interest, and you will have a sense of pride in covering everything yourself. However, you will not get the guidance offered with getting a loan. You also take on all of the risks if things don’t work out as expected.
4. Loans from Friends and Family
If you are lucky enough to have supportive friends and family, you should talk to them about lending you some money for equity into your new business. This means that you repay back the loan, and the lender also gets small ownership of the business. This provides a great deal for people who invest in your business, but you will need to give up some control of your business and future profits.
Most of us do not have friends and family who can contribute as much as we need. At this point, you may need to dig a little deeper for investors by meeting people at networking events and fighting to get meetings with people known for investing.
5. Crowdfunding
Numerous crowdfunding websites give you the opportunity to reach out to people and ask strangers for support. Most successful business-related crowdfunding campaigns provide a lot of persuasive detail about the business model and some sort of return for investors (stake in the company or product). Some of the best crowdfunding sites for startups include:
- Kickstarter
- iFundWomen
- GoFundMe
- Fundable
- Wefunder
Be sure to share your crowdfunding campaign on social media, especially in special groups related to your industry.
How to Spend the Money
Getting the money is only the first step. You also need to spend the home loan funds wisely. Some of the areas people spend loan money on include manufacturing, marketing, and daily operations. You need to buy equipment that allows you to produce your product as efficiently as possible. You also want proper software to manage finances and other daily operations. You will also need to market your company so that people know you are open for business. As these investments allow you to grow, you may hire employees and move into a larger office.
Getting a Home Business Loan
Call a professional to learn more about the requirements to get a home business loan. You can go over the details of your particular enterprise to learn what you qualify for and get help throughout the application process.
