5 Popular Business Financing Options

April 2, 2008

You don’t need a lot of money to start a freelance business. Unless you’re making the jump by quitting your job, renting an office, and hiring employees, you should be able to start by using the equipment you already own.

But, you still may need a better computer, more software, a desk, or any number of other items to get your business launched.

When I write about financing, I’m not refering to major loans or venture captial backing. I’m refering to creative financing techniques.

Below are five popular freelance business financing options:

Part-time job

While this may not be feasible for a single parent, it’s the best alternative to using credit cards or home equity loans. You can also moonlight on a smaller scale and rake any profits into future growth.

Credit cards

This is probably the most popular option among startups. I don’t recommend maxing out your cards but, rather, using only the credit you need for startup equipment. It’s too easy to spend on credit so make sure you have a budget and use a list when you shop.

eBay it

eBay is a great option to get rid of stuff. Since it’s already stuff you own, it shouldn’t be hard to turn a profit even if your items sell for small amounts. Who knows, you might even clear out a space for your office!

Grants

Contrary to popular belief, the government isn’t throwing money at anyone who asks. But, if you do your research, you might be able to get smaller grants for equipment and initial seed money.

Don’t forget to check local charities or business development organizations. They might be offering awards and small grants.

Home equity loans

Home equity loans are feasible if you actually have equity in your home. Beware of loan companies that will give you a loan even if you don’t have much equity.

Many of these loans are good for 20 years. But be careful. You’ll more than likely only be making interest payments. So, you’ll need to plan for and pay off the principle amount as soon as you can.

My advice is to always avoid borrowing if at all possible. Unless you’re a Donald Trump type, borrowing even the smallest amounts will cause sleepless nights for most people.

Once you get a few clients and start to build your confidence, you’ll be better prepared to expand using credit.

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