It all starts with a vision, with a product, or with a service.
You’ve decided to be your own boss. You are excited.
You’ve launched your website, you went knocking on doors (or offices), and clients started coming to you.
But then things started to get serious…
It was all fun and games until you realized you need a structure…a legal structure.
How much will that cost you? In the US, incorporating a company will set you back between $25 to a few thousand dollars.
That’s in part registration fees which vary where you are, as well as legal fees which depend on the legal help you’ll hire.
You’re a bit worried. Your incorporation turns out to be on the pricey side. And then you remembered you need office space, a server, developers, and assistants.
At this point, you’re probably like…what the heck did I get myself into?
Don’t worry, because I’ll teach you how to get money to fund your side hustle. Today, let’s talk about financing your small business.
Let’s answer questions like:
How to get money to fund your side hustle?
How to get through business financing?
What are your options?
Turning your side hustle into a legitimate business
Before we get into the nitty-gritty, it’s good to have the following ready because these things can make you look credible in the eyes of investors, lenders, credit bureaus, and even family and friends who are interested in investing in your business.
- Concrete business plan
- Business registration
- Separate bank accounts for your business and personal expenses
- Good credit standing
Disclaimer: This blog post should not be taken as legal advice. This content is largely based on my experience in small business financing. Consult a lawyer or a tax professional to see the options best fit for your specific situation.
5 Ways to Fund Your Side Hustle
1. Personal Funding (Savings)
Also called ‘bootstrapping’ in the startup world, most startup founders use their personal savings to inject capital into their business according to Forbes.
But, this doesn’t mean that you should withdraw everything you have in the bank. You need to be smart with what you have. This means securing enough money for your living expenses to last you for a year. The reason is because many startups are not profitable yet in their first year, some even longer than that.
If you are a service-based business, with lower operating costs and minimal business expenses, you can probably survive with three to six months of operating capital, according to Freshbooks.
Now, if you’re funding your business and you don’t have that much cash to begin with, there are a couple of tips from SBA on how to save more cash in the quickest time possible:
- Decrease credit card debt. Call your credit company and negotiate for lower interest rates.
- Pay yourself first by setting up automatic deductions to your savings account.
- Check all unnecessary expenses and cut them out completely (just until you can afford them again). Small subscriptions like Spotify, Kindle, or YouTube Premium sometimes get overlooked the most.
- Use apps like YNAB for budgeting. Or simply a dedicated notebook for budgeting will do.
- Buy pre-loved. Need a new couch? Look for Facebook groups in your area that are selling used furniture. This also includes bigger purchases like a new car.
Want to Learn More About How to Save More of Your Money?
Here is some further reading!
In my opinion, this is one of the best types of loans there is. Before you go look for loan sharks for quick funds, see if you have family members, relatives, or friends who are interested in lending you money for a low interest rate.
Remember that to avoid any future conflict, put the loan in writing. Issue post-dated checks if you have to. Be very clear about how much you need to borrow, how much the interest is, and when will the loan get repaid.
3. Credit Cards
Many people would advise not to use credit cards for business funding purposes, but actually, a business credit card can help as long as you maintain a good credit standing.
Using a business credit card allows some flexibility when it comes to paying off what you owe. You also accrue benefits and points that you can use to pay for your annual membership.
However, you still have to be vigilant with your spending credit cards often have high-interest rates and you can end up with a debt balance that is more than what you intended to have.
If you’ve damaged your credit or don’t have any at all, you can apply for the Capital One Quicksilver Cash Rewards Credit Card to establish or build your credit to where it should be.
4. Bank Loans
If there’s something you have to know about bank loans is that they are not that fond of small businesses. You have to have an airtight business plan and high credit scores before they’ll ever consider awarding you a small business loan.
However, there are specific banks that are historically known for lending to small business owners. But, remember to choose an SBA-guaranteed lender to boost your chances of securing a loan.
- Live Oak Bank
- Wells Fargo
- Capital One
- Bank of America
5. Government Grants
This is one of the most overlooked funding options among small business owners. Government programs that offer to fund, business consulting, and training. Go over to Grants.gov to see over 1,000 federal grant programs and create a shortlist of the ones that are best suited for your situation.
That’s because government grants are not all equal. There are specific grants that are geared towards specific groups of entrepreneurs facing unique challenges. For example:
Want more useful articles about funding your side hustle? Join the hustle community and get content sent straight to your inbox.
Alternative Business Financing For Your Side Hustle
Need more financing help? I’ve got you covered!
If there’s one thing I’ve learned from growing side hustles, it’s that it’s necessary to have access to alternative business financing when banks are unwilling to extend the capital you need.
With the Entrepreneur’s Business Financing Book, you will have access to strategies and techniques for financing your business regardless of your situation, assets, or credit score.
You can use the system in this book to access the amount of capital you need to launch, buy, or expand any business…And more.
Get a copy of the book Entrepreneur’s Business Financing and start scaling your business today.
Over to you- which financing option are you going to try to get funding for your side hustle?