For most families, foregoing your full-time employment to follow your dreams isn't an option. You've got kids to feed, clothe and entertain, not to mention your mortgage to cover, bills to pay and your own extra-curricular activities. Fortunately, it's never been easier to supplement your main source of income with money from a side project. Whether your passion is travel, football, art, woodwork or brewing, there's a chance you can find a way to increase your cash flow. But sometimes passion projects need funding - especially if you want to use them to escape the nine-to-five forever. So, what financing options do you have?
Getting started
All businesses, including passion projects, have startup costs. Even the simplest blog-based business may need a website, logo and some form of marketing. Depending on your project, you'll likely need to buy stock and materials. You may also need to pay suppliers, lease premises and more. If you don't have cash on hand, you'll need to find money from another source to fund your business startup costs.
The initial investment
At this early stage, a good funding option may be a credit card. Some credit cards have low introductory interest rates, which means for the first few months your repayments might be easier to manage. Credit cards can also give you the flexibility to pay back just the monthly minimum for your startup costs early on and then repay more once your business gets going. If you'd prefer a lower interest rate over a longer term and have equity in your home, another option is to increase your home loan and use your equity to get your business going. Just keep in mind, by spreading the cost of your borrowing over the length of the loan, you may end up paying more interest in the long run. When you're looking for a non-traditional lender, consider finding a financial partner, applying for a government grant or crowdfunding your project.
When you're looking to grow
The need for funding doesn't end once your business is set up. Even if your business is humming along nicely, getting to the next level usually requires more funding. For instance, you may want to hire staff or introduce a new product range, or you may go from being an online business to one that needs physical premises. At this stage, a business loan could help. These operate much like a home loan, giving your business a lump sum, in exchange for regular payments. Once your project is established and making a profit, a lender may accept your business assets as security for the loan rather than expecting you to put your house on the line. Lenders like to see a documented history of success to give them a better idea of your ability to make repayments.
What works for you
Only you can decide which funding option is right for your passion project. It will usually depend on how much money you need, what stage your project is at and how much of your business you're willing to give away to an investor. Explore your funding options today by comparing credit cards and business loans.
