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Getting Started — How to Finance Your Business
Congratulations — you've made the decision to take control of your future and become a business owner. But before you can open the doors to your new venture, you'll need to determine how to pay for your business.
Chances are you don't have enough money in your checking account to cover the cost, but there are a number of alternative business financing options that can help make your dream a reality.
This method of business financing, formally known as Rollovers for Business Start-ups, allows you to leverage money in an existing retirement account to invest in a business or franchise. 401(k) rollovers don't trigger a taxable distribution, and they enable you to start your business debt-free if you have enough saved up to cover the full expense.
Loans from the Small Business Administration are common and preferable for start-ups because they offer minimal risk and low interest rates. SBA loans are partially guaranteed by the federal government, meaning the government will repay the lender up to a certain amount if you ever default on the loan.
SBA Express Loans
Similar to traditional SBA loans, SBA Express offers the added benefit of expedited service. Perfect for businesses who don't need as much capital to get started, SBA Express loans require less documentation and can close in a little as 45 days.
Rather than liquidating your securities, portfolio loans allow you to put the value of your stocks, bonds, mutual funds and other securities to good use. Portfolio loans feature low interest rates and can be finalized in two weeks, allowing to you get up and running sooner rather than later.
Because there's no collateral needed to qualify for unsecured loans, this business financing option highlights fast turnaround time â€” three weeks or less.
Rather than buying equipment outright, leasing it may be a better, less expensive option. With equipment leasing, you can purchase up to $2 million worth of equipment and choose the repayment plan that works best for you and your credit.
The best part about the above business financing options is that they can be mixed and matched to create the perfect funding plan for you. Rather than choosing just one option, you can combine multiple methods to meet your needs and diversify your investments.