As you prepare to become your own boss, you need to get your finances in order. You’ll need enough money to cover 6 to 12 months of business and personal finances before you even launch your business. That being said, you have a few options to consider in terms of where that money comes from.
Savings
If you’re lucky enough to have a well-padded savings account, kudos to you. This should be your first option for funding your business. Note: don’t jeopardize your own future by taking the money out. If you have a savings account to cover “rainy day” home repairs, the last thing you want to do is take that money out, and then find you need a new roof!
Consider leaving your money in your savings or money market account, and just taking what you need. That way, your money continues to earn interest.
Benefits: Using your savings account keeps you from having to take out a business loan, which many entrepreneurs are reticent to do. If you have less than stellar credit, you can purchase a Certificate of Deposit and use it as collateral for a loan while earning interest.
Bank Loan
The Small Business Association (SBA) is set up to help businesses get the money they need to start a business. There are banks that cater to small businesses just like yours that can help you find a great rate. Start with your own bank, or look for one that does small business lending. Look for alternative lenders as well, such asWomen’s Business Loans. (Note: banks don’t lend to startups, so you’ll need to be in business two years prior to applying for a traditional bank loan.)
Benefits: The SBA provides a guarantee for business loans, which means applicants with challenged credit score still have an opportunity to get funding.
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