Self-Funding Ideas for Startup Businesses

crowd-fundingYou’ve got a great idea for a startup business. Now the next step is to find the funding to get the ball rolling. The first idea many people have is to start with a bank. This is an option, but you may have the assets you need to self-fund your startup business and not even know it. Many people make the mistake of thinking they don’t have the resources to fund their new business. But if you take a close look at your options you may find you have more to sink into your new business than you thought. Besides if you’re going to ask others to help fund your business, they will want to know how much you’re bringing to the table first.

The first step is to take a good hard look at your assets. You probably have more than you think you do. Assets include equity in real estate, retirement accounts, savings accounts, vehicles and recreational equipment, and collections. You can use these assets for collateral or sell them. Investments can be a resource for your startup business funding. Brokerage accounts can set up a low-interest loan against your stocks and securities. The drawback of this route is if the market should start to fall you will get a margin call. This means your broker will ask you to sell some of your securities to cover the falling market value.

Another option is your personal credit. You can use credit cards to fund your startup business, but this can be an expensive route to take. A better option may be to take out a line of credit on the equity in your home. Your lender may give you a loan based on the amount of your mortgage you have paid off. This can be a large sum of funding for your startup business. For example if you have paid $50,000 on your mortgage, you may be able to get a credit line or lump sum of $40,000. The up side to home equity loans is the usually come at low interest rate, and the interest paid on them is deductible up to $100,000. The downside to this choice is you run the risk of losing your home or real estate if you can’t repay the loan.

If you have a cash-value life insurance you can borrow against it to fund your startup business. The value built up in a cash-value life insurance policy is one of the best and safest ways to get money. Insurance companies give you a low interest rate because they will get their money back in the long run. You don’t even have to pay back the loan if you keep your policy paid up. If you pass away before the loan is repaid, the amount you owe is deducted from your policy payout.

These are a few ideas to fund your startup business. The most popular way to fund a startup business is self-funding. If you take a look at your assets and securities, you may have more money than you think to get your business up and running.

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