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How to Get a Personal Loan with No Proof of Income

How to Get a Personal Loan with No Proof of Income

You need a loan because you need money. You apply for the loan and the bank says that they can't approve you because you can't show that you're earning money.

September 20, 2019
December 12, 2018

How to Get Money to Start a Small Business – 5 Options You May Not Know About

Here's how it starts: you have an idea. It seems like it could make you some money. Soon you're asking yourself, “Where can I get money to start my business?” 

You have plenty of options... but not all of them will work out...

Some of them won't even get off the ground...

How to Get Money to Start a Small Business (Even If You're New At This)

At this point, many aspiring entrepreneurs start to get discouraged. Some have poor credit; others simply find that the lending process takes too long. Some try to fund their businesses themselves, but you might not have that kind of cash lying around.

If you've thought through all of this and are still wondering how to find money to start a small business, here are some more avenues to pursue.

1. Venture Capital

Venture capital exists specifically to provide funding to new businesses.  It usually comes from firms that gather money from different sources such as financial services firms, corporations, and high net worth individuals. The venture capital firm then pools this money and invests it in a business that it believes will offer good returns.  

They Get a Stake

Usually, a venture capital firm will ask for a share of the company's ownership in exchange for funding.  This usually means giving up majority control as well as a seat on your Board of Directors.

You Have to Convince Them   

To get a venture capital firm to fund your business, you have to convince the firm that you are a good investment. You need to:

  • develop a professional and detailed business plan, 
  • create a presentation to pitch it, and
  • focus on future growth.

Most venture capital firms are looking for companies that will go public one day. If you can show them a plan to make that happen, you'll have an advantage over many others.

You Need Connections

The venture capital world is all about who you know. You don't have to have friends in high places, but it definitely helps to have a lawyer, CPA, or other financial services provider who can write you a referral.

2. Friends and Family

If you don't have any connections in the financial world, you almost certainly have some in your own personal social circle. There are many success stories that started this way. For example:

  • As a student at Harvard, Mark Zuckerburg borrowed money from friends and started Facebook. 
  • The Virgin Group, which includes air travel giant Virgin Atlantic, started when CEO Richard Branson got a loan from his mother. 
  • Phil Knight received the money to start Nike from his college track coach, Bill Bowerman.

If you aspire to such ,  you can do it in one of three ways.

  1. Equity. Someone gives you money in exchange for a stake in your company. This means they'll have some control, so make sure you're comfortable with that. And definitely get a lawyer to draw up the agreement.   
  2. A gift. Theoretically, you get this money without strings, but some donors may want something in return if your business starts making real money. 
  3. A Loan. Experts tend to recommend this route, because you can draw up a contract that specifies repayment terms and interest rates.  That way, everyone knows what to expect.

In all cases, have your investor sign the appropriate paperwork. If disputes arise and the parties involved don't know who is entitled to what, the whole process can spoil a good relationship.

3. SBA Loans

The US government has a whole entity devoted to helping small businesses find funding. It's called the Small Business Administration, or SBA, and it builds relationships with lenders to help them offer capital to small businesses.  To qualify for such a loan, a business must:

  • be officially registered as a for-profit company 
  • operate and be located in the US or its territories 
  • have unsuccessfully searched for funding from other lenders 
  • have received an investment of the owner's personal money or time

If a borrower qualifies and the lender agrees, the SBA can guarantee a loan of between $500 and $5 million. The guarantee reduces risk for lenders and enables them to provide the borrower with:

  • comparatively lower down payments,
  • flexibility with overhead expenses, and
  • competitive lending terms.

Some SBA loans also offer ancillary services or benefits, which can range from ongoing business development counseling to a collateral-free loan. 

4. Federal Small Business Grants

The SBA also offers grants, but there are strict requirements. To qualify, a small business must be involved in research and development that falls within the scope of the Small Business Innovation Research (SBIR) program. Requirements include:

  • participation in research related to health care, military services, or environmental preservation 
  • a desire to innovate in the public and/or private sectors 
  • for-profit organization in the US 
  • majority controlled and owned by US citizens or permanent residents 
  • 500 employees or fewer

Not many businesses can get grant funding from the SBIR, but it never hurts to investigate.

5. Your Own Home Equity

If you are a homeowner with equity in your property, you can use that equity to get capital for your small business.

Home Equity Line of Credit

A home equity line of credit, or HELOC, lets you borrow against your equity. Once approved, usually for up to 85 percent of yoru home's value minus the balance owed on your mortgage, you can borrow what you need and repeat as necessary.

Unfortunately, getting money from a HELOC can be risky. First of all, if you default, you could lose your home. You also take on interest responsibilities and will probably experience a temporary hit to your credit score.

Home Equity Loan

An alternative to a HELOC is a lump sum home equity loan, which is just what it sounds like. You borrow a certain amount and a set interest rate that you pay back over time, much like a second mortgage.

A Safer Option

If you'd rather not put your home at risk to start your small business, EasyKnock has developed a way for you to use your home equity. It's called Sell and Stay, and it lets you sell your home without having to leave it.

After you sell, you receive your equity and can use it for yoru business. Meanwhile, you can stay in your home as a tenant until you decide to repurchase the property or move.

For many people, this is the safest and least disruptive way to get capital for a new business. And there's no commitment involved in learning more about whether you might qualify.

Get Started Today

Now you have some ideas about how to get money to start a small business, but most of them involve either giving up control or getting into debt.

EasyKnock lets you keep control of your business and avoid the strings and risks of lending. You get the equity in your home free and clear, and you don't even have to move. You can stay put and focus on growing your business. 

Contact EasyKnock today and find out how easy it is to get started.    
            

 

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