Start-Ups and Business Purpose Loans

4page_img6Welcome to the world of small businesses and start-ups. If you are exploring your financing options for your newly formed company, make sure you explore all your options including business purpose loans.

There is never a more exciting time than when you get your business dream up and running. In many ways, you feel accomplished and you are more than ready to take on everything that comes next including securing funding or financing. If you are like most newly formed companies, you are probably chomping at the bit to get to the next level or step. But, before you end up with just any loan, you should take a second to explore all your lending options, especially since this loan can ultimately make or break your company.

If you have been doing some research up to this point, you are probably aware that as a start-up you have several options such as funding your start-up by using your retirement account, looking at peer-to-peer lending, relying on credit cards to see your business through the initial stages or applying for business purpose loans. Clearly, all of these options can help you achieve your business goals. But, it can be difficult to determine which option is truly the best one for your company.

More than likely, you have some experience with borrowing against your retirement account or relying on credit cards to do some of the financial heavy lifting. But, peer-to-peer lending, on the other hand, may be a new concept and that’s fine. Most peer-to-peer options require stellar credit, short-term needs and typically only work with more established businesses rather than start-ups. So needless to say, if you are just starting out and don’t want to max out your credit cards or potentially ruin your retirement fund then you might want to focus on business purpose loans.

Business Purpose—the Real Deal

If you aren’t quite sure what these particular kinds of loans are then you came to the right place. Loans that are designated for business purposes, in essence, involve utilizing your home’s equity. In other words, these specific loans allow you to borrow against your home for business purposes i.e. getting your start-up off the ground. The benefit to choosing this particular option is that often you can negotiate a low-interest rate which is much lower than the rates you would have if you used your credit cards or were able to qualify for short-term financing. However, it is still important to note that the one clear disadvantage is the risk of losing your home, at least in certain states.

Is this your win-win solution?

So now that you know a little more about your lending options as a start-up, obviously, it is time to start weighing the pros and cons of each option. Ultimately, you may decide to rely on your own funding (retirement account or credit cards) until you are a more established business if you want to play it semi-safe. But, remember no option is without risk and obviously securing a loan would provide you access to a larger amount financing.

Happy senior business man making his notes at workDennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC 
Private Hard Money Lender

Arizona Tel:  (623) 582-4444
Texas Tel:     (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

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About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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