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Finance Your Home Business: Six Ways Under Your Nose
There are lots of ways to get additional capital to expand a home-based business. But before you look outside for financing, leaving the decision about your company's progress and merits to someone else, consider these six ways under your nose to finance your home-based business: Personal Savings Savings are easy to tap and involve no paperwork. The negatives: if you use the money in your business, it eats into your safety reserve and is no longer there for emergencies. It diverts funds from a very low risk investment to a high one. Whole-Life Insurance Whole life policies accumulate tax-deferred cash value that you can tap for your business. But the only way you can tap this cash without paying taxes is to borrow against your policy. As long as you keep your policy intact and pay premiums when due, loans remain tax-free. The negatives: you will be converting a low risk investment into a high one; if you decide to terminate your policy or if you default on repaying your loan, taxes will be due on all cash value accumulated under the policy; if you die before your loan is repaid, any distributions to your beneficiaries will be reduced by the amount of your outstanding loan. A Loan from Your 401-K Plan You can borrow up to $ 50,000 of the money you have saved under many 401-K plans. There are no credit checks. Interest is usually a percentage point or two above the prime rate and the interest that you pay back to the plan will be tax-deferred to the plan. Most loans are repayable out of salary deductions over five years. The negatives: you will have less money invested toward retirement; the dollars used to repay the loan will be after-tax dollars withheld from your paycheck; if you fail to repay the loan, the IRS considers your failure a premature distribution -- you will be charged taxes on the borrowed amount plus you may be assessed a 10% early-withdrawal penalty. A Home-Equity Loan These loans do require that you apply and be reasonably credit worthy. You generally can borrow up to 80% or 90% of the equity value of your home. Interest on these loans is generally tax-deductible. The negatives: you will reduce the equity value of your home by the loan amount; you will be diverting funds from a relatively safe investment to a high risk one; if you default, you put your house at risk of foreclosure. Think very carefully before using this form of financing. Personal Credit Lines and Credit Cards They are convenient, versatile forms of financing. You can borrow and re-borrow up to the line limit as needed. The negatives: you will pay relatively high interest rates-- rates range from 12% to over 18%; the minimum monthly payment on many of these arrangements will repay the outstanding balance within 42 months; it is easy to dig yourself deep into debt using credit lines and credit card debt; high outstanding balances against your line can negatively impact your personal credit rating. A Margin Loan You can use margin loans for purposes other than buying additional securities. Any margin loan will be secured by your equity shares. Rates are often below prime, applying is relatively easy, and these loans have very flexible repayment terms. Loans are initially limited to 50% of the purchase price of your equity securities. Loan repayments are triggered when the value of your stock falls below the margin limit. The negatives: Because borrowings are predicated on volatile stock values, a margin loan can be a risky proposition; if you default in repaying, the brokerage firm can sell your securities to satisfy the loan; an untimely sell-off can have a devastating effect on your portfolio and negative tax consequences. The only safe way to consider a margin loan to finance your home-based business is to limit advances to a relative low ratio of your stock portfolio value - say, 25% or less. Most of these financing methods are under your control and don't require business plans or company financials to qualify. Although each of these methods has risks and disadvantages, so do most external methods of financing. Before proceeding with one of these financing methods, carefully consider the potential benefits, risks and consequences. Whatever you decide, it helps to know the options right under your nose. George Parker is a Director and Executive Vice President of Leasing Technologies International, Inc. ("LTI"). He is responsible for overseeing the company's marketing and financing efforts. One of the co-founders of LTI, Mr. Parker has been involved in secured lending and equipment financing for over twenty years. Mr. Parker is an industry leader, frequent panelist and author of several articles pertaining to equipment financing. Headquartered in Wilton, CT, LTI is a leasing firm specializing nationally in direct equipment financing and vendor leasing programs for emerging growth and later-stage, venture capital backed companies. More information about LTI is available at www.ltileasing.com">http://www.ltileasing.com.
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Unsecured Loans: The Lesser Known Sibling Of Secured Loans What is man's greatest invention?Some of the latest gizmos would immediately crop up in our minds as the most probable of the answers. But do these gizmos really deserve the veneration that they receive. Facts You Should Know About Types of Loans When you set out to borrow, you often come across terms like unsecured loans, revolving loans, adjustable rate loans, etc. While these terms are more or less self-explanatory, it is still useful to be clear on their exact meanings and what they imply before you finalize a loan contract. Finding a Loan With Bad Credit No matter what your credit history is the simple fact is that at some point in your life you will need a loan. If you have a few black marks on your credit report and you are feeling that your bad credit will not enable you to qualify for loans, do not feel despair because there are banks that will lend to people in your situation. A Guide to Looking for Cheap Online Loans Cheap online loans may seem hard to come by, but for the individual that's willing to spend a little extra time looking for their loan then cheap online loans can be right around the corner.There are a variety of factors that can influence the amount that you pay for your loan? the collateral used, the interest rate that you agree to, and even your credit history can all be major factors that either increase or decrease the amount that you pay in the long run. Compare Payday Loan or Cash Advance Lenders Online Before You Borrow Comparing payday loan lenders, also called cash advance lenders, online guarantees that you will find the lowest rates and best terms. Payday lenders are required by law to post their rates and terms, so making comparisons is just a matter of a few clicks of the mouse. Benefits of a Home Improvement Loan Some of the many benefits of a Home Improvement Loan are outlined below. Home Improvement Loans are ideal if you need more space but cannot afford to move house. Finding a Cheap Secured Loan In a time when everything seems expensive, it might seem impossible to find a cheap secured loan.Interest rates continue to climb, and prices everywhere continue to go up? but with a little patience and decent collateral (which is the property that you offer to guarantee repayment of the loan), it's relatively easy to find the cheap secured loan that you need. Benefits of a Home Owner Loan There are many benefits for choosing a Home Owner Loan, some of which are listed below:If you are a homeowner, you have a better chance of borrowing a homeowner loan and securing the amount against your home .A secured loan is so called because you put up your home as collateral or security for the lender. What is a Cash Advance Loan? A cash advance loan is a short-term loan secured by your paycheck. It is also known as a "Payday Loan". What You Should Know About Home Equity Loans A home equity loan is essentially a type of second mortgage. You'll be borrowing money against the value of your home. Refinance Your Car Loan - 3 Tips For Refinancing Your Auto Loan Online Refinancing your car loan is an ideal way to lower your interest payments or reduce your monthly payments. By using online auto loan lenders you can be assured that you are finding the lowest rate. Personal Loans for Bad Credit Can Discipline Repercussions of Negative Credit Bad credit is like an ongoing battle for many loan borrowers. Bad credit has many repercussions for the people when they apply for personal loans. Finding A Thin Credit Or No Credit Motorcycle Loan It is no secret that thin or no credit can hurt just like bad credit when shopping for motorcycle loans. The main reason for this is that lenders all have a variety of strategies on how to approach motorcycle loans in their loan portfolios. What is a Bad Credit Personal Loan? A UK Bad Credit Personal Loan is a loan designed for the many people with a bad credit rating. A bad credit rating can make your life a misery. A Brief Look at Homeowner Loans Homeowner loans are useful ways to get the things that you need? a loan based on the value of your house, yours to use in whichever way that you need it most.Unlike some financing loans which can only be used for very specific purposes, homeowner loans can serve a variety of purposes? alternate means of auto or vehicle financing, home repairs or improvements, educational expenses or business expenditures, or even consolidating your outstanding debts into a single monthly payment. What Are VA Loans? VA loans are basically mortgages or home loans geared towards ex-military servicemen and women. The VA loan programme was created in 1944, and was initially known as the Servicemen's Readjustment Act, to help returning servicemen settle down and purchase their first home. Why Choose an Unsecured Loan? Why choose an unsecured loan? An unsecured loan can be used for almost anything - a relaxing holiday, a new car, a wedding, debt consolidation or home improvements. These are just some of the reasons why people choose an unsecured loan. Understanding Personal Loans, Cash Advances and Payday Loans Have you ever been short on cash? Has an unforeseen event emptied out your wallet? Are you short on funds in-between paychecks? I am sure that many of you have found yourselves in this situation before. Don't want to borrow money from a friend or family member because you don't want them knowing your business? Now you don't have too. Bad Credit Personal Loans - Pertinent Pedestal for a Financial Resumption In the arena of loan borrowing, there is hardly an opponent more difficult to tackle than bad credit. Bad credit implies that your personal credit history is integral and decisive in making the personal loan available for you. How to Get a Secured Loan UK Living in the United Kingdom, you might find yourself in the market for a secured loan UK. Before rushing out to try to find one, however, you might want to do a little bit of research? after all, there's a bit more to it than simply heading down to the bank and getting them to loan you the money.
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