Even when things have gone well in the recent past, businesses experience valleys in regards to overall growth which is why owners remain nimble when it comes to ways to garner funds and take advantage of financial opportunities. Here are a few ideas needed to take your business to the next level.
Credit Card Advanced Funds
For a fee, your credit card company will provide you with advanced cash so you can buy equipment, pay freelancers, or make an immediate move to benefit your business. It’s not traditionally advised since some fees and interest can be steep. It’s risky, but if you foresee the ability to pay it back in the near future, credit card cash advances help owners in a pinch.
Home Equity Loan
From the moment you began paying the mortgage, you built some equity in your home. Aside from paid interest on the loan, the home has cash value (in most cases). Therefore, you can accept another loan using that built equity. It makes some people feel uneasy as if they are going backwards, but it’s a way to free up money to seize potential business opportunities.
Life Insurance Loan
Similarly, you may have donated funds toward a life insurance plan, ensuring loved ones are taken care of in the future. Depending on your type of insurance and the amount of money placed forth, you can get a loan to buy business supplies, hire help, or pay rent on a larger commercial space.
Borrow from an IRA
An individual retirement account is meant to provide funds later in life. However, you can dip into it before the planned time as long as you pay back the funds within 60 days. If you don’t replenish the funds, you will have to pay a penalty fee based on the amount.
Ask Your Parents
They bought you diapers, your first formal attire, and supported you along your business journey. Financially secure parents or loved ones could be great candidates for a business loan. If you’re confident in what you can do with the funds, you can repay them and even provide a bit extra.
Traditionally, loans are fitted with an interest rate and a minimum monthly fee. The financier has an advantage as it takes the loanee longer to back it back. Installment loans are more stringent in that one must pay back a fixed amount of the principal and interest each month. The entire loan could be contingent on one’s ability to pay each month.
Like a homeowner, a business owner has built equity in their equipment. There are types of commercial lending that involve receiving funds against purchased equipment. Get loan information online to see if this angle is right for you.
Balloon loans are unique in that one only pays the accrued interest over the lifetime of the agreement. The principal amount is paid in full on the last day of the agreement, hence the terms ‘balloon’ toward the very end.
Business associations or incubators are devoted to helping entrepreneurs succeed. Some offer a range of financial opportunities for those building a business. For example, the SBA’s 504 loan program is focused on those wanting to purchase assets such as land or equipment. Associations may also work with local lenders to make it more likely for you to secure funds.
Some retired entrepreneurs or groups of investors donate funds to business owners. In best case scenarios, much like a scholarship, the investors ask for no financial retribution just the hope that the loans will help a business flourish. In other scenarios, an angel investor may want to oversee how the funds are used or want to get loosely involved, which varies from venture capitalists, who unwaveringly seek to make profits.
Some do not like the idea of getting involved with venture capitalists, but for those who are confident and want to charge forward, siding with a VC may be the best solution. These people talk money and can be easily convinced to provide funds in exchange for returned interest. VCs may want a spot on a company board or to work closely with executives and owners.
A direct public offering allows a business to sell stock directly to the public without the registration or reporting guidelines of an IPO. DPOs can raise between $1 million to $25 million and businesses are allowed to advertise the sale of their stock, something other companies are restricted from doing. DPOs may turn investors away since the stock is considered “illiquid” and could be difficult to sell.
This post was written by Chelsea Carter. Chelsea has taken her business from the bottom to the top in just a few short years. She is now mentoring other business owners and sharing her knowledge online through her articles.