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7 Tips for Getting a Short-Term Loan for Your Business Startup

7 Tips for Getting a Short-Term Loan for Your Business Startup

Getting loans for small business startups is not an easy task, the reason being that startups are not eligible for loans from banks. But there are several other ways of financing your business. To find the most convenient means of funding a business, you will have to look under the rocks.

Here are some of the ways of getting good loans for startups.

1. Using retirement account (ROBS)

Rollover for Business Startups, known as ROBS, allows you to invest the funds from a retirement account without requiring you to pay any early withdrawal penalties. You do not have to pay income taxes either. With adequate professional help, you can use the retirement account for a new business. To utilize ROBS, it is essential that the company is set up as “C” corporation. If the company becomes successful and starts generating profits, then a portion of the money will go to your 401K, the amount of which is calculated according to the percentage of ownership. You can consult a ROB’s specialist to make the best of opportunity.

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2. Peer-to-Peer Loan

There are Peer-to-Peer websites which focus on offering personal loans for three to five years. The aim of the loan is to pay off the credit cards or debt consolidation. Personal loans can be used for starting a business.

The problem with this type of loan is that you will be eligible for it if you have good credit score. If your credit rating is not okay, then do not waste time trying to get this loan.

3. Conventional Bank Loans

The biggest advantage of these loans is that they have pretty low interest rates. The rates are low because there is no involvement of any federal agency. These loans can have a shorter time for payment as compared to the SBA loans. They can often include balloon payments. It can be a little difficult to get approved for the loan.

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4. Alternative lenders

For small business startups that lack strong financial history, the alternative lenders sound like a very attractive option. They mostly offer online applications. The decisions on approval are made in just hours, and the funding is provided within five days of the request.

The benefit of working with alternative lenders is that you have a chance to finance your business even without a strong financial background. There are a few limitations about the usage of the loan, but approval for the loan is instant. The drawback is that the interest rates can be higher as compared to the ones charged by banks.

5. Using credit cards for financing a startup business

It can be a cost-efficient method of paying for the startup. Several credit cards offer zero percent interest promos. During that period you can borrow money free of any interest. There are rewards and cashback programs. These programs allow you to earn money for your business by just charging the purchases of the card. Some cards allow you to make $500 by only signing up for the card and making a few purchases in the first few months.

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Business credit can be built by responsible use of the card. Credit cards are also sufficient for good debt consolidation tool. You can transfer balances and save money on interest by taking advantage of the zero percent interest.

The disadvantage of credit cards is that they are not a stable source of credit. The credit card companies have the right to lower the credit limit without any warning. The interest rates are high as compared to other sources of capital. Using personal credit cards for business can affect the individual credit card score.

6. Borrowing from acquaintances

Pitch your idea to your friends and family. If they like your idea, they will be willing to contribute some money for the startup. Remember to get the loan in writing so there is no misunderstanding later on.

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7. Use crowdfunding

You can focus on raising small amounts of money by involving a large number of people. This can be done by using a crowdfunding website. There are different ways of crowdfunding.

You can build a strong foundation of your startup by opting for any of these short-term loans. They will give your start up the boost it needs while giving your investment a security blanket as well.

Featured photo credit: reynermedia via flickr.com

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Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

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This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

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