Business Start up Funding:

12 Sources for Start-up Funds

Many people have a lot to say about what money is the root of, but I assure you it is the root of every business. Today with the Internet starting a home based business is less expensive then in the past, but with cash you can buy the things your needs to operate and you can stock up on inventory of products that you sell to your customers.

So, where does the business start up funding come from and what are the best ways to pull together the money you need to start up your home based business? Here I suggest the 12 best business start up funding sources.

List of Business Start up Funding Sources

Savings: Barrowing fro your savings accounts are probability the first place one should turn to when looking for cash to start up their business. The interest rat is zero and you do not need loan approval.

Credit Cards: More and more often, home based business owners are turning to credit cards as sources of cash for business startup. However, let me give a word of caution. Beware of extremely high interest rates and extra fees for cash advances. If you decide to use a credit card for your business, try to get on dedicated solely for business expenses. You will have an easier time keeping track of your business expenses for the year.

Retirement funds: if you are working a full-time job, you probably have some sort of retirement fund established. This fund is as good as gold, and you can apply the cash within it to help you start-up your new business. There are a couple of problems, however, with early distribution of retirement funds. First Uncle Sam is going to penalize you for doing so, and will then add insult to injury by taxing you on the income you pull out of your fund. Second, if you wipe out your retirement account, you have nothing to fall back on if your business fails.

Cash settlements: If you received a cash-settlement for any reason, you can use that cash to finance the start-up of your home based business.

Disability grants: Even if the money comes from a disability payment because of on-the-job injury that prevents you from pursuing your former vocation, the cash can be used to begin a new career at home.

Inheritances: Although inheritances are subject to taxation, you can be left with a substantial amount of funds that can be applied to starting your new business.

Credit unions: Credit unions are member-owned and therefore tend to offer better interest rates than do regular banks or other financial institutions. If you belong to a credit union, be sure to try there for a loan first.

Investors: Do not forget to present your business idea to potential investors. Only be aware that when you accept money from investors you will probably have to give them something in exchange. That something is usually equity in the company. Moreover, with equity in the company, goes power to have a say in how the business is run. Therefore, if you do not want anyone telling you how to run your business, this may not be the best way for you to pull together funding for you business.

Life Insurance Policy: Depending on the kind of life insurance policy you have, you may be able to cash it in or take out a loan against it. Read the fine print on your policy or consult your insurance agent to see if you have this option.

Home equity line of credit: A home-equity loan is similar to a personal loan, with one major difference: You are required to pledge your home or some other real property as collateral in the event that you default on your loan obligation. Because your equity bears the burden of the risk, a fact that may weigh on you mind if your business gets into financial trouble, home-equity loans for substantial amounts of money can be obtained relatively easily. Loan terms can for as long as 15 years. You likely have a choice of receiving your money in lump sum or setting up a line of credit you can draw on, and pay back, as necessary.

Loans from friends and family: When aspiring home-based business owners do not personally have the resources to finance, their new business, friends and family are often the first potential source of funding they turn to. As long as your request for a loan will not cause your relationship to sour loans from friends and family can be a great way to put together the financing you need. Be sure to treat relatives and friends, as you would any business relationship, using written documents.

Microloans programs: The government and a number of foundations offer microloans programs, particularly targeted to women and minorities. Check with your local Small Business Administration to find out what is available and if you qualify. The SBA is not a lending institution it offer information about start a business and other institutions that offer loans and grants.

There are all kinds of business start up funding to bring together the money to start your home based business, therefore only barrow money for the things that will pay you back quickly. For example, if you are starting a lawn care business the money borrowed for a professional grade lawn mower will be recouped in a short period. However, the money spend on a new desk and chair for you office will not pay for itself and will not be so easily recouped. Therefore, only buy what you absolutely need to get started.