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What Is The Risk Involved In This Financing Situation?

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What is the risk involved in this financing situation?

Borrowing from your relative: The risk in that is if they want there money back right away and if you miss a payment they would never let you borrow money from them again unless they still trust you.

I know from personal experience in borrowing money from a relative and it always came back negative so I told myself if I needed to ever borrow money again I'd go to a bank to help my needs and never family, cause they always let me down. I do have a real life rich relative but they don't know me and wouldn't fund anything cause of no trust.

Besides when I do graduate I do not intend on building my own business.

What is the risk involved in other financing situations (i.e., selling bonds, issuing stock)?

* Home equity loans

* Credit Unions

* Cash-value life insurance

* Customers

* Broker loans

* Suppliers

* Micro-loans

* Liquidate retirement funds.

* Borrow from a retirement plan.

* Consumer Finance Loans.

* Credit Cards.

Home equity loans.

Whether it is a home-equity line of credit, a second mortgage, or the refinancing of an original mortgage, you can usually get as much as 80 percent of the equity in a house. The loan is easy to qualify for, with rates comparable to and occasionally lower than small-business loans. Obviously, the disadvantage is you could lose a home if you are unable to repay the loan.

Credit unions.

Small business owners can get personal, unsecured loans from credit unions. If you have been a member of such an institution for some time and can qualify, it's worth asking.

Cash-value life insurance.

If you have such a policy you can borrow against it and great interest rates are possible depending on the fine print. Cash-value life insurance also is excellent collateral for institutional loans.

Broker loans.

Your local investment broker can lend you money based on the balance in your security account.

Securities can be turned into cash in the time it takes to make a phone call to Wall Street.


Advance payments for year-long service contracts or shipping products, special pre-release discounts or incentives for a host of products and services are examples of customer financing.


Asking a supplier to give 60 to 90 day terms, particularly for inventory or goods that you manufacture or resell within that time frame, is the equivalent of a short-term loan. This works best if you can show orders to suppliers and you should be prepared to pay for the use of their money through an interest rate or more business.


Two local entrepreneurial non-profits organizations, the Portsmouth Community Development Group and Norfolk State University's program MEDAL offer this type of financing. These loans are usually described as un-bankable deals and generally do not exceed $25,000.




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