Need help financing your business? Ask us how!

It is a problem as old as the hills. You have this brilliant idea to make money. You may have the training and or expertise. You have the drive, the character. But there’s one thing missing: the funding. How do you finance your startup business? It is one of the most vexing problems for a new entrepreneur.

If you care to research it yourself, you would come across the standard sources the experts always list such as: savings, friends and family, grants, bank loans and lines of credit and Angel investors. These are all viable sources and they can and do work to varying degrees depending on your individual circumstances. But curiously enough there is a possible source of funding that I have never seen the experts list, perhaps in oversight. Maybe it’s because it is so simple. It is your tax return.

Every year thousands of people get refunded substantial sums on their federal and state taxes. The amounts could range up to tens of thousands. Oftentimes people use these funds to pay off bills, take a vacation, purchase a new vehicle, etc. But for the new entrepreneur, this could be an additional source of funding that he/she, hitherto, might not have thought about. Depending on how much is needed these funds could be used entirely or to supplement other sources to start the new business.

These monies could prove to be especially useful when you are trying to get a loan, whether private or commercial. One thing that puts lenders at ease is to see that the borrower has a significant amount of money that they are willing to put up as risk. It is called having skin in the game. Because studies have shown consistently that a person who is committed to putting at least 20% down on a loan will be more motivated to pay off that loan rather than lose their personal money in the deal.

If you have any questions that have not been answered by this article, please speak with your tax advisor or you can call 718-878- 3959.