Financing Your Small Business, You Are a Small Business!

Do you think of yourself as an entity? Well, you are. You do not work for your brokerage. You work with your brokerage, to succeed in business as a whole. It is a super support system for most. Guidance, love, encouragement, marketing tips and ideas, and a sense of belonging to a family, a group.

However, you are self-employed. You are not an employee. An independent contractor, in most states, applies to our profession, as Realtors. Treat yourself as a business. Keep your monies separate. Open a checking and a savings account for your business. You can form an LLC, easily, and it is not expensive. Usually, under one hundred dollars, through an attorney. Make an appointment with an attorney and discuss your options about incorporating your business.

When you need monies for your marketing campaigns, ads, or your various Realtor expenses, are you financing with credit cards? Amazingly, interest rates on home loans are falling, yet, the credit card companies are rising, out of sight. They have no government caps any longer, in my state. In our state of Connecticut, the cap of 18% for credit card debt, was removed in 1994. Check with your state government to see if you have a cap on credit card interests. Paying 22% - 30% interest is just nuts and will put you at risk of going out of business. So, redesigning your finances now, would be wise. You may want to look into the Small Business Administration of the US. You can find them online and, also, find answers to most, if not all, of your questions. A local bank or credit union may be offering loans for small businesses, too. The next time you are at your local bank, ask the teller or loan officer, what programs they may have that might be appropriate for your needs.

Stated income loans or non-conforming loans, no longer exist for us. The subprime market ate up our chance of ever using that option any longer. Even if you hold high credit scores, which used to be the case prior to the high market, you cannot secure a loan without verifying your income, by current paychecks and going back 2 - 3 years of your income taxes. Being self-employed, most of your income continues to support your daily business. If you have equity in your home, that would help. You will be held to the income standards of the general population.

If you do need to use credit cards for your business, here is the advice that my nephew gave to me. Go to Google and search for fixed rate, low interest credit cards. Rather than the 0% that is for a limited time, stick with a fixed rate plan, so that, you know what your exposure will be down the road on this card. One more tip, read the book, The E-Myth Revisited, written by Michael E. Gerber. Why Most Small Businesses Don't Work and What to Do About It.

Wishing you a good spring market! Get out and get it done!

It's a Good Life!

Fran