Primary Funding Resources for Business Startup Costs

When you are thinking of starting a new business you would require funds for starting such a business. There are various sources for getting such finance. Banks are an obvious source of such finance. But, there are other sources also available for financing your business.
Personal Saving
Personal Saving is used most readily as resource for starting up a new business. As the money involved is yours, there is no procedure to follow and any interest or penalties to be paid for utilizing it. While utilizing your personal saving, you should ensure that enough funds are left to carry out your day to day expenses and pay for your personal bills. It is a general practice to keep at least three to six months of salary as balance in your bank amount.
Pension Fund
Similarly, you may get fund from your deposits in a Retirement Fund account. Basically, money in such account belongs to you. But, you have to carry out some paper work for withdrawing the fund. This paper work is much. But, you may have to pay penalties for premature withdrawal. You may even lose some fund as withdrawal penalty along with you might have to pay some tax on the amount withdrawn. Tax to be deducted might be less depending on your age and the purpose for which money is withdrawn. Therefore, it is better to take expert advice before withdrawing money from your account.
Credit Card
Borrowing money using credit cards is one of the easiest and quickest ways to get fund for your business. Generally, people start taking loan using their personal credit cards. Later, business accounts could be opened for getting credit. But, taking such loans from credit cards has lot of risk. High credit limits and varying interest rate could lead to your debt mounting to high level. Even if you default with one single payment, you are highly penalized and your personal credit ratings are lowered. It would create difficulty for getting credit from other sources.
Home Equity Loan
For those who are doing business from home, such an option is available. In case of stable housing market, it is quite safe to take such loans. You might get quite economic interest rates. In case, you take loan on the basis of floating interest rate, there is a possibility when housing market becomes weak; you could land up with high loan payment liabilities. This could lead to even losing your home.
Bank Loans and Credit Lines
If you could maintain high credit rating provide acceptable guarantee, the banks are ready to provide you loan as personal loan or business loan. It enables you to develop a cordial relation with your banker which would help you to farther develop your business. But, to maintain this good relationship, you should ensure timely payment of all bank dues. Because small business is always considered as high risk, they are always kept under close watch.
Friends and Family
Lastly, you could get funds from your friends and family members. But, in order to maintain good relations in future, it is better that a written agreement is made laying down all the terms and condition of taking such a loan.
But, taking these loans has a risk that you may land up with bad credit loans . There are about seven million Americans whose debt exceeds more than 20% of their net income. These people may take advantage of a debt management program. This program consolidates all your separate debts into one single account. The program also provides following benefits:
1 Payment of dues reduced by 50%
2 Debts are repaid within 36-60 months
3 Credit rating is rebuilt
4 Unnecessary harassment from creditors is avoided

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