Owner Financing Business

1. Your Own Savings
   Many people save for years just to someday start their own business. This is the ideal situation. However, if you haven’t done that, maybe you have a 401k, an IRA, or a stock portfolio you can cash in for your new business financing.

   Yes, you will have to pay taxes and penalties, but you will also likely have plenty of business deductions to offset these expenses. Of course, you are also betting your future on your ability to build a thriving business.



2. Signature Loan
   This used to be a good source for owner financing business. You only needed to have a strong personal financial statement and a good positive relationship with your bank...but not today.

   This type of loan is more difficult to get right now, but times will change and this form of lending may eventually come back.

   Just remember that the bank is not your Angel Investor…they are making this type of loan on your word and your reputation.



3. Home Equity Loan
   In the past, when banks would loan up to 150% of the value of your home, this was one of the most common forms of raising cash when the owner is financing their business. Now, it is much more difficult to get this type of loan unless you have substantial equity in your home, plus a good reputation with your bank.

   You also need to think about what you are risking here, and if you have a family, they need to be part of this decision.



4. Personal Asset Loan
   If you own anything of value, such as; a vacation cabin, motorcycle, boat, car, real estate, and the like, you may be able to borrow money using any of these personal assets as collateral.


5. Selling Personal Assets
   If you own personal assets, per the above, and cannot borrow against them, you could consider selling them. If you are not using many of these assets, this may be a better avenue than borrowing against them, because it will make your business balance sheet that much stronger.


6. Credit Cards
   Many new businesses have been started on the strength of the owner’s credit cards. Just know that this is a risky gamble, and that you will be personally liable for the debt. But if it is one you and your family are willing to take—it could be just the ticket for your new business.


7. Borrowing from Family and Friends
   There have probably been more new businesses started by borrowing from family and friends than by any other single method. With rare exception, most smaller (owner/operator) small businesses are started by owner financing business, and family and friends is where that financing often comes from.

   One warning however: make very sure of your plans and figures, because you could end up with no friends and no family (that are speaking to you).



8. Taking on a Partner
   Unless you have been working with a partner from the very beginning, or your plans call for taking on a known partner, you can run into all kinds of problems when taking on a partner just to get financing for your business. This is especially true for the smaller business.




9. Keeping Your Day Job
   You may want to keep your regular job and continue your pre-venture planning while you save up as much money as possible to start a business.

   If your business involves developing a prototype or doing extensive market testing, you may be able to keep your regular job while you work on the preliminary aspects of your business.

   The major problem with this method of owner financing business is that all too many people use "lack of startup money" as an excuse to stay in a job they don’t like and NEVER get around to starting their own business—don’t be one of those!

Not having money to finance your business is not a good reason for not getting started. If you have done your homework properly, so you are quite certain your business idea is viable, and you have the proper passion (obsession?) for the business, there should be nothing stopping you from reaching your dreams.

The financing is there and available—but you will have to work to get it.

In addition to these ideas for owner financing business, there certainly are other ways to obtain money for your business. The next report in this financing section deals with Small Business Bank Loans.