Need some money to go into business for yourself, but can’t manage to get a full blown business loan from the bank? Well, that’s probably due more to shady shenanigans by millionaires and (even more so) billionaires than to any actual problem with your own finances. Options exist for securing a loan for things like fulfilling your own dreams of becoming an entrepreneur that are actually readily available and quite possibly much easier than you thought. Your dreams of getting out from under the thumb of the New Capitalism to live the fantasy of Old Capitalism may not be quite as subject to the fixed rules put in place by monopolistic plutocrats rigging the game as you thought.
Keep in mind the wise words (paraphrased) that a very successful entrepreneur told me when I was helping to assist the ghostwriting of his autobiography: every small business that becomes a success is another dollar that stays out of the pockets of the crooks who have corrupted every single thing about capitalism that once made it better than any alternative.
Life Insurance Policy Loan
Do you have a whole life (not term) insurance policy that has built up enough cash value to qualify for taking out a loan? Then you are your way to making your entrepreneurial dreams come true. (It’s how Ray Kroc started McDonald’s and Walt Disney started his empire. ) Here’s the best thing about taking out a loan against your insurance policy to start a business: you are not losing anything from the policy. The loan doesn’t come from the money you’ve already paid into the policy. The loan is actually a form of borrowing against that cash value you’ve built up. Meaning that the value of your life insurance policy doesn’t go down and won’t go down as long as you pay back the full amount of the loan. Even better is if you have been paying into that insurance policy long enough, the interest it is earning may well be more than the interest you pay on the loan. In other words: if the cash value of your insurance policy is big enough, you could be in the position of taking out a business loan to bet on your entrepreneurial spirit that is–get ready–completely interest free .
Home Equity Loan
The home equity loan is a method of borrowing money that is very popular, especially for doing some home improvements. Despite the name indicating otherwise, however, a home equity loan is in no way limited to being used on the home. So if you don’t have a life insurance policy in which you have built up sufficient cash value, but you do have a home in which you have built up sufficient equity, you have at your disposal a relatively easy way of getting the money you need to start your own business . And remember: every small business that thrives is a needle in the neck of the monopolies (not the minimum wage) that are killing jobs in America.
Your options are to borrow money for a fixed amount or to establish a line of credit. Home equity loans are essentially second mortgages on your home as the loan is secured by the property. If you don’t make your payments, the lender can foreclose just as if the loan was an original mortgage. In most cases, this means of borrowing money allows you to get up to 80% of the equity in your home. Look for low introductory rates when applying for a home equity loan, but be aware that after a certain amount of time (usually six months) the interest rate will be subject to fluctuations in the prime rate. A wiser approach depending on the interest rate situation at the time of borrowing is to lock yourself into to a fixed interest rate for the term of the loan. One of the benefits of a home equity loan is that the interest charges on the loan may be fully deductible when you itemize your tax deductions.
Home equity loans do come with some disadvantageous points to consider. The luxury of borrowing money off the equity in your home could be dependent on closing costs and additional fees. Inquire of your lender if they are willing to waive the fees as long as the line of credit remains open for at least two years. Foreclosure is the ultimate downside to a home equity loan, so make sure that you will be able to cover the payments even if you should lose your job or experience some other economic catastrophe.
Bank Account Line of Credit
Setting up a line of credit from your bank account means filling out a much shorter form than is necessary for a full blown business loan. The advantages of a bank account line of credit are that you borrow only money you need and you repay the loan as you would a credit card debt. This may not be the ideal means of establishing a financial base for your decision to make your entrepreneurial dreams come true, but it’s better than no loan at all. Treat a bank account line of credit with intelligence and focus and you could very nicely lay down a solid foundation moonlighting as an entrepreneur while still keeping your slave job to make sure you can regularly pay off the debt. The downside of borrowing money off a bank account line of credit is that you can quite quickly find yourself drowning in debt if you don’t have self-discipline. But then again, if self is what you lack, you probably shouldn’t be going into business for yourself in the first place.