Going into business is extremely rewarding. When you open or take over a company, you’re making an investment into resources, operations support, and the future of your business. You may want to buy a hospice care company on your own or with a partner, but not everyone has liquid capital on hand to invest in a healthcare business. That doesn’t mean it’s impossible. Here are four of the ways you can finance a company:
Get an SBA loan
A Small Business Administration (SBA) loan is a smart way of financing a company. The application and approval process takes time, and you’ll need to meet quite a few criteria. But as a federally-controlled loan, lenders like banks have flexible options and can provide relatively low-interest rates, and can approve a loan of up to $5 million.
If you live in the US, find out more about SBA loans here.
Roll over your 401(k)
In the US, you can use your 401(k) to finance your business. If you create a C Corporation with the help of a tax attorney, CPA or other experienced third parties (usually around $2500), you can reallocate these funds with no tax penalties. Considering a business can be a great investment toward your retirement, rolling over your 401(k) could be your best option.
Leverage your home equity
If you own your home and it’s appreciated in value, you may be able to get a home equity loan or line of credit. This is a good option if you’re in a strong housing market and your interest rates are stable. If you already have some savings and just need to raise a portion of the capital, consider a home equity loan for company financing.
Borrow from friends and family
While it may seem like most businesses start up by bootstrapping, taking out loans or relying on angel investors, 38% of startups are actually funded by family and friends. Asking for financial help may be the easiest conversation in the world, or you might be worried it’ll be awkward at best. To save time, money, and stress down the road, we recommend only approaching trusted individuals with whom you have a solid relationship. Formally set the boundaries early on, outlining terms in a written agreement. Is it a loan, whereby a certain date you must repay the amount in full? Is it an investment, where your supporter expects to receive a return? Or is it a gift, where the donor doesn’t expect to be repaid? It’s not difficult to find company financing if you know where to look. Make sure you’re also able to cover your cost of living while you’re ramping up your healthcare business. Whether you need to have a conversation with your partner, bank or financial advisor, the sooner you get your plan in motion, the sooner you can launch your company, live life the way you want to, and help others in the process.
