5 High-risk Ways to Raise Funding for Your Business Idea

If all else fails and the zeal to get your business up and running is killing you from the inside, you might want to consider some of the following high-risk funding measures. After all, desperate times call for desperate measures and it takes a decent dose of madness to be a successful investor. However, you need to be sure that you have tested your business idea, gotten validation, and that the potential returns from the business is worth the risk you want to take.

So, are you ready? Let’s get started…

Alternative business funding

1. Credit card debt

Have you read the story of the founders of Google – you should definitely take time to read how Larry Page and Sergey Brin used credit cards to bootstrap their business in the 90s. Their credit cards came in handy regularly to buy software and computers.

If you have a great idea that should definitely see the light of day, you might want to consider taking up credit card debts. If you currently have a bad credit score, you should work on improving your credit score so that you can be approved for new cards and get lower interest rates. Conventional personal finance advice tends to steer people away from credit card debts but it would be a shame if you can’t execute your idea because you chickened out.

2. Retirement account

If you have been making smart personal finance decisions, you would most likely have a retirement savings account such as the 401(K), 403(b), IRA, and Roth IRA among others. Retirement accounts are designed to provide you with a decent income when you retire. However, you can raid the retirement account to fund a business that could potentially yield more returns than the ‘safe-bets’ in your portfolio. You could also be liable to pay some penalties for withdrawing from the retirement account under certain thresholds.

Of course, the business must succeed; otherwise, you might be destitute during retirement.

3. Title loans

You can raise funding for your business by using you car as a sort of collateral to get a loan. Of course, you must have paid off your auto loan – you can’t get a title loan on your car if you haven’t paid off the car.

The title loan on your car is similar to a home equity loan but its processing is often faster. The only downside is that you could lose your car if your business idea doesn’t succeed and you are unable to repay the loan.

Getting business loan

4. Whole-life insurance

I hope you have a life insurance policy – you really should get a life insurance policy for the benefit of your loved ones. Now, if you are finding it hard to raise money to fund your business idea, you might want to consider borrowing money against your whole-life insurance policy.

You should note that you can only borrow against a whole-life insurance with cash values – the money that you borrow will also reduce the amount paid to your beneficiaries should you die before repaying the loan. However, borrowing against your whole-life insurance is risky business; hence, you should make sure that you don’t die, terminate the policy of default on paying back.

5. Home equity

Your home might be more than just a place to eat a good meal and rest your head at night. If you are having trouble raising money for your business, your home could be an important source of business funding if you know what you are doing.

Home equity loans works by allowing you to use your home as collateral that you’ll repay a debt – you can also borrow money or raise a line of credit against your equity in the home. The potential pitfall that makes a home equity loan scary is that you might end up in less accommodating homes if your business fails and you are unable to repay the loan.