When it comes to finances, the pendulum swings from elation to fear. One month you could land a high paying client and have a lot of influx coming in, while the next you’re biting your nails worried about how to make ends meet. The following is a non-comprehensive list of some more traditional options that people bring up during financing conversations. It’s also not designed to give you an in-depth review here, either, just a few pros of each.

But first, I should point out that traditional forms of funding did not come from investors. According to Venture Hacks, investors didn’t start popping up until the 60s and 70s. Thus, we’re going to focus more on other ways that people have made money in the past out of the sheer tenacity of will or using their lines of credit.

Savings

If you’re lucky enough to have a well-padded savings account in this economy, kudos to you. This should be your first option for financing as it has many benefits and barely any downfalls. The benefits would be that you can avoid a bank loan with interest as long as possible, thus keeping your costs low. The flip side? You should keep a tight reign on what you spend so you don’t dip into those emergency funds. A good bet? Leave your money in your savings or money market account, and just take what you need. Your money will continue to earn interest on the sidelines.

Bank Loan

When we think loans, we often think of banks. The beauty of loans is that they are practically everywhere (even if somewhat difficult to get) Start with the Small Business Association (SBA), which is set up to help businesses get the money they need to start a business — among other things. The SBA have their loans, but so do banks. Start with your own bank to ask if they lend to small business; you’ll likely end up with a better rate if you do. Finally, you can look for alternative lenders as well, such as Women’s Business Loans — or any other special group you’re part of. Sorry guys, you’ll have to be a minority or go to the military before the government will help you out on this one. Some banks won’t loan to a business unless it’s at least two years old and have amazing financial records.

Your Retirement Funds

While researching, I also found that you can borrow against your 401(k) to help your business. It’s like using your own money, then paying yourself back for the loan. If you don’t, you’d be in trouble. Plus, there are may be penalties for borrowing funds, so tread lightly when borrowing from your other savings and investment accounts.

Home Equity/Line of Credit

We’ve all heard about re-mortgaging property for a variety of reasons — usually related to increasing the property value. However, you can also use it to finance your company. The key seems to be to borrow no more than 80% of your home’s value through a home equity line of credit otherwise you’ll have to also purchase private mortgage insurance. Your odds of getting approved increase if you have great credit and good payment history. Of course, interest rates are a pain and if your business fails, you risk losing it if you can’t pay the loan.

Borrowing from Friends and Family

Always a classic: borrowing from friends and family that believe in your. Granted, having a friend or family member who’s willing to invest in your idea can be a boon, it can also be a bit of a curse. Some may want to be involved in the business in exchange for the investment, while others may hand you a check and walk away. Make sure you’re clear on payment terms (and offer interest) and how willing you are to have someone involved in helping you make the business decisions. It’s also a good thing to make sure you’re actually a good business match before accepting — just in case.

Product Presales

This is a common one, especially for people that do books and video games, but it’s applicable to anything that you can create a good marketing buzz around. They benefit is that you will have interest free money to work with, while the down side means predicting how much it will cost accurately, then delivering on the promise in a timely manner.

A Day Job

My personal method, and that of many people I know, is the ubiquitous day job. It feels like it’s about 8 times more work than someone handing you money, but it’s a bit more attainable for a majority of people. Reason? It works not matter what your credit history, how much money you have in the bank, and doesn’t take gender and race into account. Sure, it takes a lot longer, but it forces you to focus on where every penny goes, take your time to make the most stable choices, and gives you a healthy dose of respect for your company’s cash flow.

I’m not a finance expert, banker, investor, or any other expert that gets paid to work with money. Know of a method that was missed? Please speak up in the comments!

If you are an expert in the finance field, please, link us! 😀