According to the SBA, debt financing is the most used method for a small business to obtain start-up capital. Other potential sources of business financing include friends and family as well as venture capitalists. All forms of financing have their pros and cons and we will review some of these in this article. I’ll also let you in on a little-known secret that may provide you with the funds you require for your business without breaking the bank, so to speak.
The Top 3 Ways to Obtain Start-Up Capital
Debt Financing is the option most entrepreneurs look to for obtaining start-up capital for their small business. The lending institution will scrutinize your finances and business plan and if all is in order, a loan or line of credit is issued with a repayment plan. Unfortunately, in today’s business climate it is nearly impossible to qualify for a loan. Even if you do obtain one, you’re one financial misstep away from having the rug pulled out from under you. Lenders are a bit jumpy these days. You can mitigate this scenario by having the SBA guarantee your loan. In addition, you may have to “put up” collateral such as your house to secure the loan.
Friends and family have been a source of start-up capital for generations. While it can be an easy source of financing it comes with some unpleasant risks. It’s one thing to lose your own money if a business fails but it can be devastating to break the news to a friend or family member.
Venture Capitalists provide start-up capital to businesses with rapid growth potential. They have a seemingly unlimited source of funds to provide for future growth as well. The downside is that you have to give up a piece of your business. If you’re not careful they may eventually control the whole business with you “outside, looking in.” The venture capitalist wants a return on his investment “yesterday” and may push your business in a whole new direction. Be very careful with these transactions and keep your lawyer and CPA involved.
The BORSA Plan – A Unique Way to Obtain Start-Up Capital
The BORSA (Business Owners Retirement Savings Account) Plan takes advantage of a little known section of the ERISA Act (Employee Retirement Income Security Act) to finance your business. The basic thrust of the BORSA Plan is to use your 401k or other retirement savings to invest in your new corporation without taxes or penalties. You’re basically going to take a portion of your retirement funds and roll it over into the stock of your own company. You then build your business and retirement “nest egg” at the same time. The more value you add to your business the higher your retirement fund grows.
I’d be remiss if I didn’t provide you with this one caveat, this financing isn’t for the faint of heart so you’ll need to have things in order for it to work to your benefit including:
Complete confidence in your abilities. If you’re the type of person who will worry about losing your retirement funds then this plan may not be for you. If, on the other hand, you are confident that you can build your business and therefore increase your retirement funds then the BORSA Plan may be an ideal option for your small business start-up capital needs.
Pick up the phone right now and call 281-606-5719 !! It's your money, your dream, and if you believe you have a solid business idea and are willing to put your all into bringing it to life then you deserve access to your own money without tax or penalty! The BORSA Plan will do that for you. Call now at 281-606-5719 and ask for Suzy Granger. If it's after normal business hours then leave a message, or fill in the short form below. Either way, your inquiry will be returned immediately upon resumption of regular business hours. Get the money you've already earned and start your dream right now!
