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Guest Post by Noel Finley
Starting up a home business can be an expensive process. While the benefits to a home business are substantial, it can quickly deteriorate your bank account if you are not careful. Home based businesses often involve a lot of digital fee’s and services. These are things that are difficult to resell if the business goes sour, because they are not physical products. Your expenses could be for web hosting, a website, a domain name or online marketing. If you want to afford these startup costs without substantially reducing your personal funds, then you need to investigate into financial options.
1 – Payday loans
A payday loan is a short-term loan with a significant interest rate. Payday loans are subject to quick repayment terms and you must repay the loan within as little as a few weeks. If you’re confident that you will make the money back for your loan shortly after launching your home based business, then a payday loan could be a viable option. Keep in mind that payday loan companies have a large amount of returning clients. These are clients that have failed to repay previous loans and have taken out additional loans in order to repay what they owe. This is not a situation that will help your home business and a payday loan should only be considered if you’re confident in your ability to repay.
2 – Find a partner
Chances are, if you are interested in starting a home based business, then you could probably find someone else who is interested as well. The best way to finance your startup costs is to find someone to split them with you and become a 50/50 partner for the business. By doing this, less risk will be on you and two heads are always better than one. Keep in mind that you need to pick your partner carefully. Starting a business can be a stressful process and it can ruin relationships between two individuals. If you choose a partner that is a friend or family member, be prepared for any hardships that may occur.
3 – Bank Loans
While a bank loan may be complicated and seem like a lot of work, they usually come with the lowest interest rate that you can find. Bank loans allow you to take out a short-term or long-term loan as well. This means that you can repay the loan on your own terms, just as long as you meet the minimum monthly payment. This is drastically different from payday loans where you must repay the loan quickly.
4 – Find Investors
An investor is similar to a partner, except that they have no direct involvement with the business. An investor is there to simply provide financial assistance with the agreement that his or her investment will be repaid with interest. The interest rate should be determined prior to receiving the investment loan and it should be fairly profitable for the investor. This is the primary reason why they are offering up their money, they want to see a return on what they are providing. A solid interest rate for the investor would be a 10% – 20% API.
5 – Credit Cards
Home businesses often don’t have excessive startup costs. Your startup costs should be minimal when compared to a local business. The benefit of this is that you can use items like credit cards to afford your purchases. A credit card is not ideal because it has a high interest rate. However, if you can pay the money back quickly, it shouldn’t damage your budget. Be sure to spend responsibly on your credit cards and watch your spending as best you can.
Author Bio: Noel Finley works for FastCash.org an informational website that provides articles and resources about loans.