As a small business owner, obtaining a traditional business loan can be an overly engaging process. This is why many entrepreneurs make sure they have fully exploited their own personal resources before they contact a lending agency for funding.
Personal money is money that one acquires as an individual, rather than under the guise of one’s business. These funds can be acquired before a business is launched to raise startup capital as well as during operation to raise working capital.
Below is a breakdown of the top ways to invest personal funds into your business.
Personal cash savings: Setting aside money in a savings account or investment gives an entrepreneur the ability to fund a startup without any debt. Moreover, you can also choose to loan your business money from your personal account as opposed to third-party creditors.
Funding a business with personal savings requires stellar financial discipline and adequate money management skills, but it rewards you with complete control and influence over your business.
Personal loans: An individual looking to start a business can approach a lending agency and request for a personal loan rather than a business loan, especially if the intended startup is low-revenue and requires a relatively small amount of money to start.
Using customer credit cards: Credit cards can be a relatively inexpensive, fast and efficient way to get funding for a business in its early days. The most common way to get funding from credit card sales is through merchant accounts.
A merchant accounts provider such as First American Merchant will give you the money you need for your business and to offset the cash advance, a small fixed percentage of your daily credit card sales is paid to the provider.
Through a merchant account you can actually invest a small part of your startup inventory back into the business.
Using a retirement account: Some people put all or part of their retirement account savings into their business. A Rollover for Business Startups (ROBS) allows you to do so without the penalties and taxes that accompany a simple early withdrawal.
While putting your retirement funds at risk can be a risk, if the business succeeds, there is the added benefit of your profits growing in a tax advantaged retirement account.