Self-Financing Your Startup

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You have decided on the type of business venture you want to  start, so the next step to success is deciding where the money to fund it will  come from. Where do you start?

September 22, 2014
Author: NCH

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The number one form of financing for most business startups  is self-financing. When you apply to other financing sources, such as venture  capitalists, the government or bankers, they will want to know exactly how much  of your own money you are investing into the venture. If you don’t have enough  faith in your venture to put your own money on the line, why would anyone else  want to risk theirs?

Do an Inventory of Your Assets

The best way to start self-financing is by doing an inventory of your  assets. It is possible you could uncover resources you didn’t know you had.  These assets include:

  • Saving accounts
  • Real estate equity
  • Retirement accounts
  • Vehicles
  • Recreational Equipment
  • Collections
  • Investments

Using Assets for Funding

Once you have an inventory of your assets, it’s time to  explore the best options on how to use them to finance your start-up. You may  decide to sell some of the assets for cash or use them as collateral.

For example, Home owners may consider getting a home equity loan.  The bank will either provide a lump sum or extend a line of credit based on the  equity of your home. A home equity loan could be a substantial line of credit,  depending on the value of your home. Home equity loans have relatively low  interest rates, and all interest paid on the loan, up to $100,000, is  tax-deductible.

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Most new entrepreneurs will generally have more assets than  they realize. The more you invest, the easier it will be to acquire capital  from other sources.

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