If you’re hesitant to take out a loan or use a unique financing option to fund your business, you may think using your own money is a better idea. However, you have a limited amount of money, so you’re limited in what you can do with it.
On the other hand, when you’re not spending your money to start a business, you may gain some unique benefits. Learn more about how other financing options could help you more effectively.
Debt can be a risky thing to take on, but if you pay it off in a timely manner, your business builds its credit score. When you have a robust credit score in your business’s name, you open yourself up to better funding opportunities.
Consider taking out a small business loan with a monthly or quarterly repayment plan. If you need to take out a loan to expand your business in the future, lenders will be more likely to approve your application if you have good credit.
Another business funding option that doesn’t require your own money is a partnership with an angel investor or venture capital firm. These folks often invest in businesses in their respective niches, so they may offer you valuable advice as you get your business off the ground.
Should you choose to partner with a venture capital firm, they’ll likely sit on your board of trustees. This is a great opportunity to gain the advice of more seasoned entrepreneurs.
Room To Grow
If you self-fund your business, you have a solid limit on how much you can afford to spend on your business. You may be growing at an exciting rate, but you’ll hit a wall if you run out of money and don’t want to borrow any.
If you want to avoid spending your own money to start a business, don’t shy away from financing options that involve a loan. A well-thought-out business plan and diligent attention to growth will help you use that loan effectively. As your business grows, you’ll have the cash you need to make your repayments.
Good To Know:
If you don’t want to use your personal savings and are still unsure about a loan, think about accessing the funds in your 401(k) retirement plan. Using 401(k) small business financing is not a loan. Instead of investing your retirement funds in publicly traded companies, you can use your retirement funds to purchase shares of your own company. You’ll have access to your retirement funds tax free and without the requirement to pay interest.
Want to learn more about the financing options available to you? Use Pango Financial’s funding solutions tool to discover financing strategies that don’t involve your own savings.