How to Fund a New Business

Many people really like the idea of running their own business. It might be that they want the opportunity to be their own boss, they feel they can do a good job, they want to work from home or they think it will make them lots of money. Whatever the reason, the business will need to be set up and this will cost money. Some businesses will only cost a small amount but others will need a lot of money. It is worth thinking about different methods of funding so that you can decide which will be the best for your business.

Use your savings – you may have some savings that you will be able to use. You might decide to lend that money to the business or donate it. If you want to lend it then you will need to decide whether you want to charge the business interest like a bank would and whether this is allowed and investigate any legalities that you need to be aware of if you do this. It is worth considering how you will manage without this money and if you never get repaid or have to wait a long time to be repaid whether this will suit you.

Use a loan – it is possible to use a loan such as those offered at to fund a business and many lenders will have a business loan option. You will need to put together a business plan and use that to show to a lender so that they can decide whether they are interested in lending you money. It is often tempting to make the business plan seem more positive so that they are more likely to lend. However, you do need to be realistic as you need to be sure that you will be able to repay the loan. It is very possible that the lender might want you to use your home as collateral on the loan so that they have something to back it up if you are unable to earn enough to repay. Although it is a loan for a business they may want a family home to be used if the business has no assets. It is wise to make sure that you are confident that things will work out and that you will be able to manage the loan repayments. If you are risking losing your home then you need to be really careful. Even if you do not have any collateral you still want to avoid leaving the loan unpaid as it will still show on your personal credit rating and could mean that you will struggle to borrow any more money.

Crowdfund – crowdfunding is a modern idea where people raise money for different things in return for something. For example, if you were setting up a café you could ask for donations in return for a meal or drink. The reward needs to be appealing to the donators but you have to ensure that you will still make enough money so that you can go ahead with the business purchases that you need to make. These are more often used for charitable or good causes rather than general businesses so it may depend on what you are planning on doing as to whether it will be a good option for you.

Ask friends and family – Some people might decide to ask their friends and family to help them. Obviously not everyone will have the money available to help but they might have ideas or be able to contribute other things that would be helpful. It can be fun to get people you know involved if they are enthusiastic but it is very likely that you will not be able to pay them, certainly not to start with and maybe not at all and so they will need to have an understanding of that. They might be keen to help anyway.

Earn the money – Of course you could also earn the money as you go along. For example, if you worked full-time, you could run the business in your spare time using some of the money you made to finance it. Or if you could afford to, you could work just part-time. You will have to work out how much money you need to live off and how much money you need for the business to come up with a plan that will work for both.

These are just a few ideas and there are probably many more that could come up if you had a good think about it. It is good to think about which might be the best for you and your business. IT could be that you will be looking at a combination of different methods in order to come up with the best possible solution.

How to Cope When you have a Mortgage

A mortgage is a loan that is used to buy a home. It is something that many people have as most homeowners were not able to buy their house outright without borrowing the money first. Therefore, they have a mortgage. As homes are expensive, many people find that their mortgage payments are the largest chunk of money that they spend each month. This can mean that it can be quite difficult to manage sometimes as coping with these payments and everything else that has to be paid can be tricky. There are things that you can do to help though.

  • Find the cheapest mortgage – it is really important to make sure that you are not paying more for your mortgage than necessary. There are many places available to get your mortgage from and so there is likely to be a chance that you will be able to find one that will be cheaper than what you have. If you are just arranging one then compare them and look for the cheapest. If you have had a mortgage for a while then you may be able to switch to a cheaper one. It is worth knowing that you may have to pay a fee to switch loans from one company to another and so this is worth looking into first. It can be worth paying a small fee if then make a large saving, but you will have to decide whether you feel it will be worth it and whether you can afford to pay that fee as you will have to pay it first. It is also important to think about whether a fixed or variable rate mortgage will be the best for you. If you think that interest rates are likely to rise then you might want to fix the rate to protect you against this and to also make sure that you know exactly how much you will be paying each month. It is a risk though as if rates fall you will still be paying a higher amount and may feel that is unfair.
  • Compare prices on other things you buy – as well as thinking about the price of your mortgage, it is important to think about how much you are paying for other things as well. There are many things that we buy and many things are probably available more cheaply. It is important to make sure that we are not paying out more than necessary, although it is worth considering value for money. If we pay a bit more for something which lasts longer or gives us a better product or service then it could be worth it. However, it is worth trying cheaper items and seeing whether you feel that it is worth paying less for certain things. The more expensive the items, the biggest difference it will make if you cut down the cost so look at those items first.
  • Reduce your spending on luxuries – most of us will buy more things than we need. Whether that is buy some alcohol to go with our meal, a pretty necklace that caught our eye, upgrading our phone or donating to charity. These are all things that we could go without but we have to consider whether we are prepared to. If we can cut down on spending money on things which are not necessary it will mean that we will be able to have more money available to pay the mortgage with. It can feel hard to do, but it is easier than struggling with the mortgage or even having your house repossessed because you have not made the payments.
  • Look for opportunities to earn more – it can be useful to earn more money as well. This might seem tricky but if we are determined then we will be able to look for opportunities around us to get more money. You might be able to sell things you no longer need, sell things that you make in your spare time, find work online, do some freelance work or do an additional job. These are just a few ideas and if you are determined to find ways to make money then you will be able to see opportunities and use these to make more money.  It can be quite fun looking for little ways to make money and seeing your income increase. There are lots of ways that you can make money and so you should be able to find some opportunities to do so.

You will probably find that the longer you have a mortgage the easier it will be to cope with. This is because most people will get pay rises and so their income will go up making the mortgage easier. Of course, if you lose your job, have to take a pay cut or if interest rates rise dramatically this will not be the case. Therefore, it is worth being well prepared just in case things do not go as planned.