Business Know-how - Alternative Funding Source And Construction And Remodeling Your Office
An alternative funding source generally refers to an individual acquiring business
capital either in addition to or instead of traditional means of financing. Some of the most common types of alternative funding are factoring, non-traditional loans, leases for property, vehicles, or equipment. However, there are several other types of funding seen as even more of alternative means to build capital.One alternative way to gain funding is to borrow against the cash worth of an individual's life insurance. To determine how much can be borrowed from an insurance policy, the policy owner must look at the last annual statement for the policy. Typically, policyholders do not want to borrow more than ninety percent of what the policy is worth. Loans against certain insurance companies are tax-free, but it is important to find out if this is the case with the policy an individual owns. It is also vital to not allow the policy to lapse due to unpaid premiums; this can negatively impact the holder's credit and tax situation.
An individual may also choose to use part of the equity in his or her 401(k) plan as an alternative funding source. Most 401(k) programs allow participants to borrow up to fifty percent of their funds with no credit check and low interest rates. Borrowers usually have up to five years to repay the loan, and they do not have to pay taxes on the interest until they retire. However, there are some drawbacks to borrowing against a 401(k) plan. Borrowers are spending their own money and losing interest on their investment. Once the money is borrowed, it is no longer free from taxes or tax deductible, and may be considered a premature distribution. Borrowing from a 401(k) program is only advised for individuals in a financial emergency.
Construction and remodeling are used by entrepreneurs looking to expand or improve the condition an existing business. Construction of a new business location usually occurs when a company experiences long-term profitability and wants to improve its customer database. Businesses opt to remodel an existing location to make use of valuable space, make existing customers more comfortable, and attract new clients.
The most common concern regarding construction and remodeling is money. Some lenders may provide loans tailored specifically for these purposes. While others lenders may not, they still provide general-purpose loans that can be applied toward any business activity. For large loans, lenders usually require business and personal financial documents, a business plan, and credit reports from each owner. These documents are used to assess the risk posed by a potential borrower, thereby determining the loan terms for that borrower. Lenders may also require collateral from businesses applying for secured loans. Many non-traditional financial institutions offer construction loans as well. These lenders may be able to provide more competitive loan rates and terms than a traditional lender.
Construction and remodeling companies also offer financing. These companies are usually able to provide better loan terms and interest rates than traditional lending institutions. Most construction and remodeling companies only require a down payment and some type of collateral to secure the loan. These businesses may not require borrowers to pay until the construction or remodeling is complete.
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