This is a guest post from Leah Gibson, a writer who watches the financial markets and has agreed to write this informational piece to help my WAHM audience figure out funding for their mom businesses.
The National Federation of Independent Business found that women have been launching new businesses at a greater rate than men over the past two decades. They’ll create more than half of the 9 million-plus new small-business jobs expected to be created by 2018, and more than ever they’re doing this from home offices across the country. If you’re thinking about joining the ranks of mompreneurs, there’s no better time to get started.
To get started, you could seek a loan from the Small Business Administration (SBA), your local bank or try these alternatives. But these aren’t your only financing options. Here are four more:
Home Equity Loans
Home equity loans provide you with an easy way to get the money you need for a business without relying on friends and family to help out. Lenders grant home equity loans based on the value of your home and how much of your mortgage you have already paid to them. The Federal Trade Commission notes that you’ll be limited in the amount you borrow, normally only up to 85 percent of your home’s value. You will have the advantage of paying a low interest rate, and your loan may be tax deductible depending on the amount.
The biggest disadvantage here involves skipping payments, which could force the lender to take your home. If you are worried about defaulting on your home equity loan or mortgage, consider other options, such as an annuity cash-out. If you currently have an annuity or structured settlement that you receive in monthly payments, you can instead get most of your money in one large lump sum.
Grants
Grants allow you to start a business without having to repay one dime. CNN Money reports that you should especially apply for a grant if your small business involves the technology industry, as organizations and corporations eagerly award grants for tech businesses with a potential for growth.
Grants go quickly, so file an application the moment the grant becomes available within the specified deadline period. In addition, certain grants limit what the funds may be used for, so use the money toward expenses detailed in the grant information. Search for grant opportunities through Grants.gov and review all eligibility requirements.
Military Loans
Have you served in the military, or are you a spouse to someone who has served in the military? Get the money you need for your business by taking out a military loan.
Military.com states that the VA doesn’t give out money directly, yet the SBA has contracted lenders to provide loans to current service members, veterans, service-disabled veterans, Reservists, spouses to a service member and widowed spouses of service members who have died during active duty. The SBA.com may provide you with a Patriot Express Loan if you meet all eligibility requirements.
Crowdfunding
Crowdfunding allows numerous investors to give you money over the Internet to start a business. Forbes reported that $2.7 billion was raised last year for over one million campaigns worldwide.
Simply contact friends and family members to sponsor your campaign by giving a donation. They, in turn, ask that they contact their friends and continue to spread the word as you watch your funds skyrocket up to the desired goal. Disadvantages you encounter include giving the investors a small bit of your business equity, offer a reward to people who donate, reach your goal to be able to keep the money, pay a certain percentage to use the crowdfunding site or pay payment processing fees from the funds raised. Websites suited for business crowdfunding include Indiegogo.com, Kickstarter.com, CircleUp.com and SoMoLend.com.
*This post is for information purposes only. Apply for loans and other funds at your own risk. Always consult your financial adviser.
4 Funding Sources for Your Mompreneur Business Venture originally published at: Ramblings of a WAHM