Top 5 Sources of Personal Savings For Funding a Small Business Startup
What are the Top 5 Sources of Personal Savings for Small Business Startups?
- Cash Accounts
- Liquidated Securities
- Home Equity Line of Credit (HELOC) or Home Equity Loan
- 401(k) or IRA, in the form of a Rollover as Business Startup (ROBS)
- Cash Value Insurance Policies
Most lenders and prospective investors (even friends and family) expect the small business startup owner to invest a consequential amount of personal capital, or equity, into the business, as doing so demonstrates commitment and confidence. This personal investment is often referred to as "skin in the game."
It is typical for small business startup owners to employ a mix of the above categories identified in the Kauffman Foundation report in order to launch their businesses. The categories usually fall into two buckets: equity and debt.