When beginning a side hustle from home, what you need is investment capital. Unless you have a proven track record, the chance of getting money from Shark Tank or a venture capitalist is virtually nil. Even if you manage to become moderately successful, raising any kind of business finance is tough. This is why, if you asked most successful millionaires, they’d tell you that they got the money for their first business venture from a signature loan.
It makes you wonder what a signature loan is and how it might be useful when trying to scrape together the money to get your side hustle started. Let’s look at why it made sense for other successful entrepreneurs to take out this type of loan.
A signature loan is a personal one against your name, but it isn’t secured against an asset like an automobile or a home that you own. The good news is that while you could worry that you might get a little behind on your payments, you’ll probably still be allowed the time to catch up. You don’t have to worry that they’ll take your house over a small loan of a few thousand dollars. Just the cost of selling your home for fair value and moving out is likely to be costlier than repaying the loan. So, this type of funding has a little more sleep-at-night factor on its side.
Clear Repayment Terms.
When you agree to borrow money, you know what the payment every month will be because it’s included in the loan agreement. The interest rate is known and set before the loan is ever issued, so you have complete clarity on repayments. You can look at your income projections for your business, and any personal income you have coming in from other paid work, and figure whether you can afford to take the loan out. It’s all clear from the outset with no surprises.
You Choose What to Spent It On.
There isn’t an assigned purchase or debt repayment that you have to agree to when taking out the loan. The lender may ask you how you plan to spend the money, but ultimately you decide what you want to do with it. You can put it in the bank ready until you need to tap the funds and just make the repayments over time while you figure things out; at least it’s there if you need it.
Not having to get specific about where the money is going is helpful because the plans for your side hustle may change if you alter your business plan or decide on a totally different business should the first idea not pan out. Pivoting in your business model is a common thing these days, especially in the early days, so keeping the purpose of the funding flexible is helpful too.
It’s very common that a new business will overestimate what money they’ll bring in from sales in the first few months. Having some money available on-tap when you need it prevents running out of funds at a crucial early growth stage of the business. The extra cash gives you options you might otherwise not have and options are always good to stow away in your pocket in case you need them.