Every business needs funding from time to time and sometimes that need is immediate. There is no time to go through official channels to round up money for the next shipment that is to be POD, paid on delivery, and there certainly isn’t enough in the bank to cover the amount due upon receipt. So what can you do as the owner of a home based business who needs to inject funds immediately to keep things going? There are actually several things you can do.
Determine How Much Is Actually Needed
Before you go scurrying around trying to find the funds you need for your home based business to survive until the next payment comes through, you need to evaluate just how much you really need to keep you going. The process may take a bit of time but it is well worth the effort if there just isn’t enough in the bank or in personal accounts that you can see at the moment. You may actually not need as much as you think so this is a vital step to take before seeking any kind of funding.
The point here is that you will evidently need to take a loan of some kind and there will be interest and finance charges on the amount you borrow. Therefore, the smaller the loan, the easier it will be to repay it when the time comes. Whether you are the founder of an online venture or a company that provides services from your home office, making money online does take a bit of time to realize a profit but when that magic moment comes, you can take steps to straighten out your financial affairs going forward.
Accurately Notate Money You Take from Personal Funds
Although you are probably not in real estate where comingling of funds is definitely against the rules, it is vital for the sake of tax records that you keep a careful account of where all money comes from when you are running a business. Every penny counts in the eyes of the IRS and so, even if you make a ‘loan’ to your company, you need to account for where that money came from.
You also probably need to pay it back or set up a payment plan which would keep all your dealings transparent. You could call it an investment as well but that money, every penny of it, must be accounted for. If you are not quite sure what kinds of records Uncle Sam will be looking for or how to keep them so that they are easily understood if you get audited, the Internal Revenue website has tons of useful information you can refer to.
Seek Out Family Members Who Might Have Funds to Loan
When at all possible, personal loans are much cheaper because friends and family don’t charge interest or finance fees. They will simply let you borrow the money you need to be paid back at some predefined future date. Make sure to write up some kind of official agreement for your records because this money will also need to be accounted for at year’s end.
Even small home-based businesses are carefully scrutinized by the IRS so keep careful records of every single transaction. Also, your family member or close friend may feel more comfortable with the loan if it is handled professionally. They may or may not expect interest on the amount loaned but in any case, you could offer the amount of interest that money would have earned in a savings account for the length of time the loan was outstanding.
Title Loans on Vehicles
If you are in need of money for your home-based business immediately, then your quickest solution would probably be to procure a title loan on one or more of your personal and/or company vehicles. If you travel in the line of business, at least one of your family cars may be registered to the business for insurance purposes. As the business owner and, consequently, the owner of the vehicle, you would most likely qualify for a title loan in your state.
This would even be the quickest of all options, even quicker than wheeling and dealing with family and friends because you could get approved and be out the door in less than an hour in most cases if your vehicle meets the requirements of the title loan company.
Long-Term Loans May Also Be an Option
If your home-based business is in need of a larger sum for a long-term project, you might want to consider refinancing your mortgage on your home or obtaining a second mortgage. Money acquired in this way could pay back the initial ‘emergency’ loan and then carry you forward into the future. One thing you may want to consider is putting the home in the company name. If you incorporate your home-based business, this may be a wise move anyway as personal debt cannot be held against a corporation.
If you’ve gone into debt growing your startup, then many assets should have been placed in the company name to begin with. This is when you should seek legal advice from an attorney who handles corporate accounts. Legal fees might be a bit steep but protecting your company and personal assets from loss is the intelligent thing to do. In the end, which would be costlier, paying the attorney or losing everything you own? Whether seeking legal tips online from sites of authority or discussing your business with a local attorney, you can’t afford to turn a blind eye. Ignorance of the law is no excuse, as the saying goes.
The thing you need to remember is that quick loans should be paid back in the same manner in which you got them – quickly. Therefore, it may be necessary to take out a long term loan to pay off the emergency loan you acquired and have enough left over to keep your business going. Take a deep breath. Assess the situation and then move forward with a clear head. Don’t borrow more than you need or you will be guilty of falling into that age old trap – from the frying pan into the fire. It’s hot enough already so stay cool and the solution will come.
Image: Home Business written on a wooden cube in a office desk
