Breaking The Bank

Don't Stop There

Although finance companies and credit unions are obvious sources of small-business capital, there are other places to look. Have you considered your life insurance policy or credit card company lately?

"You can take a loan against your life insurance policy if it's a permanent policy," says Virginia Bueno of the American Council of Life Insurance. Insurance companies will lend up to the cash value of the policy minus interest.

Permanent policies have a cash value feature, and the best part about these "loans" is that they don't have to be paid back. They're also easy to obtain, can be used for any purpose and have competitive interest rates.

But there's a downside, cautions Bueno: "If you tap into the cash value of your policy, it's going to affect your death benefits. It lowers the benefit [paid to your heirs] by the proceeds of your loan."

If you're an American Express Small Business Services card holder, you may be eligible for a pre-approved, unsecured line of credit of up to $50,000 from the company. It's accessible by check and can be used for any purpose. Entrepreneurs may contact American Express to apply for the credit line. The company also offers equipment leasing up to $25,000 for card holders and noncard holders alike, as well as auto leasing financing up to $40,000 for card holders only.

Another good source of financing to consider is your suppliers. "If they can get credit and you can't, they may be willing to give you credit because of the profit they're making on the products sold to you," says Sihler. He adds that there is typically a cost for this credit, and the supplier could use the equipment you are purchasing as collateral.

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This article was originally published in the March 1998 print edition of Entrepreneur with the headline: Breaking The Bank.

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