Seven Places to Find Home-Biz Startup Money

Think you've exhausted your money-raising options? Try these fundraising alternatives for your homebased biz.

By Paul and Sarah Edwards

Opinions expressed by Entrepreneur contributors are their own.

While the old saying "It takes money to make money" has some bearing on starting a home based business, how much money it's going to take depends on the kind of business you're starting. But before thinking about how to fund your home business, you have to determine how much you need--and that may not be as much as you thought.

For example, the startup costs for some home businesses--like cleaning services, daily money management and pet sitting--are quite low, costing in the hundreds of dollars to launch. Other businesses--like medical transcription, private investigating and mobile pet grooming--will cost $10,000 or more. And neither of these estimates includes living expenses, which you'll need to take into account when calculating your startup costs if you don't already have a job to cover those costs.

The most common sources of startup funds are tapping into your own piggy bank, retirement funds, insurance policies, employee severance package, a loan from a family member or friend, credit cards or a home equity loan. If you've already considered or drawn from those sources but still need additional funds, here are some other types of wells you might be able to draw from:

First, think about assets or resources you own or are entitled to, such as:

  • Taxes. While still employed at a job, you can reduce withholding taxes by changing your number of allowances. Each additional allowance on a $1,000 paycheck is worth about $20; on a $2,000 paycheck, $25. So you can unlock an instant cash stream by increasing your allowances in line with the deductions you expect to have available when you file your annual income taxes. Simply follow the instructions on the IRS form or consult with a tax professional for more information. Calculate these at
  • Collectibles. For almost instant cash, you can sell collectibles you've acquired yourself or through an inheritance. This could be anything from your childhood comic book collection to your great aunt's silver tea service, so check your attic! You'd be surprised what people will pay money for, so don't overlook things you might just consider "junk." Auction sites like eBay, as well as sites specializing in the type of collectible you have, make it easy and inexpensive for you to get a good price for your belongings.
  • Disability help. If you're disabled, you may be eligible for a program that provides you with counseling, classes and capital with which to start a business. Check with your state's Vocational Rehabilitation Agency to determine what it offers. You can find your state's agency by checking the Social Security Administration's website.

Second, you may be able to tap into:

  • SBA loans. Probably the loan program most suitable for home based businesses is the SBA's Microloan Program, which is administered through local non-profit community lenders. The average microloan size is about $10,500, but loans can be for as much as $35,000. When this program was started, loans were character-based, that is, they didn't require collateral. Most programs now require some type of collateral, as well as the personal guarantee of the borrower. You can find the agency administering these loans nearest you on the SBA's website.
  • Angel investors. While most angel investors, such as those you'd find through sites like and are interested in companies that already have a track record, if you have a hot, innovative idea, you may be able to interest a well-to-do person in your community, like a doctor or a group of doctors, to invest in your venture.

Finally, you may be able to line up prepaid work so that your customers can help finance your startup. For example, you can:

  • Get deposits on contracts you line up. This might be in the form of a purchase order on which you may be able to get a bank to advance your funds. Or, if you're a service provider, such as a professional speaker, it's common to require and get half your fee in advance from clients. This can also be done if you have a product your customer will be reselling, giving the customer confidence that they'll get back the money they pay to you upfront with something they believe their customers will gladly pay for.
  • Barter for the products or services you need. For example, if you provide lawn-care services, you may be able to get printing, web design or equipment you need by your trading your own business' services.

When it comes to funding your home based startup, thinking creatively could help you achieve your financial goals.

Authors and career coaches Paul and Sarah Edwards are's"Homebased Business" columnists. Their latest book is The Best Home Businesses for People 50+. Contact them at

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