Published On: Mon, Mar 1st, 2021

Financial Assistance for Everything You Need in Life

If you are a small business owner, it can often feel like everything you do revolves around your business. You spend years dreaming of owning your company, and you put a ton of energy into getting everything started. You have missed sleep planning and worrying about your operation. If you have a team of employees, you also have the added stress of knowing that maintaining that business impacts way more than just your family. More than likely, you still wouldn’t trade your business for anything.

If you are considering starting a new business, you should be prepared for an array of challenges and rewards. The joy and satisfaction of knowing that you can see the results of your  work and the freedom of being your own boss.

 In either scenario, you will encounter many ups and downs to funding your business, and in turn, to funding your whole life. When you encounter these speed bumps, it is important to understand that you have financing options to keep you going. Here are a few of those options.

Paycheck Protection Program

The federal paycheck protection program, or PPP, was a program created in 2020 to assist businesses that the Covid-19 pandemic had impacted. While the funds were quickly exhausted within weeks of the program’s creation, it has been re-funded, with a focus on very small businesses. 

PPP loans are available through the SBA or get them from PPP loans have a very low-interest rate, and they are forgivable as long as a certain percentage of your loan is used for payroll.

401k Rollover

If you have been saving in a 401k, you can roll it over and cash it in for emergency expenses. 401Ks typically are taken as pre-tax income, so any withdrawal you take will be considered income in the year it is withdrawn. There are penalties for this, so it should be a last resort. There are other options that utilize your 401k savings. It is possible to roll a 401k into a Roth IRA. Roth IRAs can be borrowed from with no penalty for certain expenses, so that might be a better option for short-term business funding.

Angel Investors

Angel investors can save the day when your business needs funding. They provide funds for everything from startup expenses to ongoing maintenance. Angel investors can be found through online sources or occasionally through local resources like the SBA or your local  chamber of commerce. Angel investors typically gain an ownership stake in your business in exchange for their investment. This ownership stake might be permanent, or you could have a buyback arrangement, so be sure to clarify the details of your agreement before signing and accepting payment. 

Friends and Family

Friends and family are similar to angel investors in many ways, with a few pros and cons that they don’t share with angel investors. Family and friends are typically more forgiving than unknown investors, so you might be able to convince them to invest with less detailed business plans. The counterpoint to this is that family can be challenging to work with, and the arrangement ends up mixing in a lot more personal rather than a strictly professional arrangement. You also run the risk of damaging a close relationship if things go wrong in your business. 

In summary, there are many options for financial assistance when you own a small business. Between family and friends, outside investors, or the many opportunities for credit and grants, you can find the right solution to help provide funding for your business.

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