At Home News, Vol. 3, Issue 7, July 2010

Editor: Sarah Hamaker

 

Funding Your Business

 

You’ve got the idea to start your own home-based business but need some cash to get it off the ground. Or maybe you want to grow your business. Finding the funds doesn’t have to be hard if you follow these suggestions to keep you and your business on sure financial footing.

 

A few words of caution before you get started. Please do not use your home as an ATM machine, i.e., getting lines of credit or loans for seed money. If your business should fail, you could lose your home.

 

Also, let the borrower beware. Whether you borrow money from a bank, friends or family, keep in mind Proverbs 22:7: “The rich rules over the poor, and the borrower is the slave of the lender.”

 

Here are some places to find funding.

 

Loans. Traditional bank loans can be costly for small businesses, but in recent years, micro-loans, usually for small amounts up to $25,000, have become a good way to gain capital. Places where you might receive a micro-loan includes credit unions, online sites such as LendingClub.com and the Small Business Administration (SBA).

 

Save. Reduce your expenses and sock away every spare dollar to fund your business. Take another hard look at your start-up costs and pare down to the bare essentials for the beginning. For example, see if you can forgo a separate cell phone or phone line for your business. Use your landline for faxing and calling. Settle for a slower Internet speed or use the public library computers when you need a faster connection.

 

Sell things. Raise cash by downsizing your household goods. Do a clean sweep of every room in your house and select saleable items. Stage a garage sale. For big-ticket items, like furniture, use free online Web sites like Craig’s List and your local newspaper classified, which often will list at no cost items for sale if priced under $250.

 

Tap funds in the bank. No, don’t use your college savings accounts, IRA accounts or retirement funds. But if you have more than six months’ living expenses—and a fully funded “emergencies” account for car repairs, etc.—then consider using some of that money for your business.

 

Ask family or friends to invest in your business. Get your business plan in order and start calling friends or relatives who might be willing to help. Draw up a formal agreement with the terms of their investment clearly spelled out. However, please note that if your business should fail, your relationships might become strained.

 

Be sure to keep careful records of what money you put into your business for tax purposes. Use your profits for repayment and to fund future expansion.

 

Sarah Hamaker, a freelance writer and editor who works from her Fairfax, Va., home, has written Hired@Home: The Christian Woman's Guide to Working From Home (DPL Press, June 2008).

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