Financing

The best way to start a business is to use your own savings or a portion of them. You will feel better about being in business knowing that you staked your own investment in it. It will motivate you to work harder to earn back your investment and replenish your savings.

It can be useful to find a general partner to open your medical billing business. Both parties might invest equally in the business, or your partner might invest more than you if your funds are unequal. You would need to sign a clear partnership agreement with the person indicating your individual investment in the business, the method by which you are each paid back for your investment, and how the two of you will divide up profits. However, there are many benefits to having a partner. First, two people can often produce better results than a single person simply by virtue of having two heads thinking about the business. Second, you can share the hard work of launching the business, finding clients, networking, and marketing—all the while running the business with the clients you begin getting. Third, you can cover for each other on those occasions when you need to be out of the office due to family issues or just to take a few days vacation.

If you have a 401K or other type of retirement savings account, you may be able to withdraw money from it to use to invest in a business. For some types of retirement accounts, you have to pay a penalty for “early withdrawal” but there are some legal methods for avoiding this, such as starting a new C-Corporation that offers a retirement plan to the owners, and then transferring your retirement savings to the new corporate plan which can be used for investment. We recommend that you contact your accountant to discuss your specific situation with your retirement account to learn if you can withdraw from it and, if so, what penalties you may need to pay if it is deemed an early withdrawal. You might also contact Benetrends (www.benetrends.com ), a company that helps business owners obtain funding using their 401(k) retirement plans as well as offering business loans.

If you already have a home equity line of credit, look into tapping into this for some of the funds you need to start your new business. If you do not yet have one, you may be eligible to apply to open one up if you have equity in your home through its appreciation since you purchased it. The good thing about a home equity line of credit or a loan is that you can use for any purpose and the interest you pay on it is often tax deductible on your personal income taxes if the home is your primary residence. Home equity loans are one of the leading methods that business people use to fund a new business. The rates are typically less than other types of personal loans and their repayment schedule is often ten years or more, making your monthly payment very affordable.

Do you have a close personal friend or relative who truly cares for your future and might consider loaning you some of the money you need to launch your medical billing business? If so, are you hesitating to ask them for a loan? Many people are simply worried that borrowing from a friend or relative could jeopardize the quality of your relationship. But think about it. Many people who have money now are uncertain how to invest it. They may simply be putting it into CDs or savings accounts earning very little interest per year. What if they actually liked the idea of investing in your new business because you may be able to pay them back with more interest than they could possibly earn today through a bank? The point is, it could prove to be a very valuable proposal to talk to your friend or relative and offer them very substantial terms to pay them back with interest for loaning you all or some of the money you need now. Show them your business plan, the ClaimTek website, and talk honestly with them about the business potential you have to start a profitable medical billing business. You may be surprised that they are more than willing to loan you some of the investment capital you need.

Your credit card may be one of the fastest ways to obtain the funding you need to start your new business. If you have built up your credit card equity over years, you may already have the capability to put $10,000, $20,000 or even $30,000 on your credit card and pay it back over time at the interest rate charged. (Be sure to understand how much your monthly payment will be for the amount you charge on your credit card, so you will not be surprised when you begin getting your monthly statement. It is vital that you be able to pay the minimum monthly payment due to prevent yourself from getting into credit card debt and a cycle of higher and higher interest rates.)

If you have a good credit score, such as over 700, you may be able to call your credit card company and ask them to increase the credit line you already have. Many banks are happy to reward a good credit card owner with a higher line of credit.

Valuable Tip #1 -- Pay attention to those “cash advance” checks you receive in the mail from time to time from your credit card bank. Many of these offer zero percent interest for six months or even one year. You usually have to pay an up-front fee of 3% or 4% of the amount you decide to take in the cash advance. So imagine that you receive an offer for a cash advance with a fee of 3% and zero percent interest for one year. Let’s say you deposit one of these checks into your savings account for $5,000, you would immediately owe $150 in interest charges that you should pay on the very first statement you receive. But then you have one full year to pay off the remaining $5000 and there is zero percent interest. If you tried to pay off $500 per month, you’d pay off the entire $5000 in just 10 months.

Valuable tip #2 -- Many banks are eager to expand the number of credit card customers they have. Many of them offer these types of zero percent deals for new customers. Try to find a bank that is offering a credit card with zero percent on new purchases for six months or one year, since these deals are well worth it if you are in need of cash. On these offers, you do not even need to pay a fee, since your bank will consider charging the purchase of your ClaimTek business package one of your new purchases, not a cash advance. It is no different than going out and buying a television set or a blender – it is simply a new purchase that you get at zero percent for one year. To find banks offering new customers a zero or low percentage offer on new purchases using their credit card, visit these web sites that specialize in helping consumers find out which banks are offering the best credit card deals:
www.comparecards.com
www.bankrate.com/credit-cards.aspx
www.creditcards.com

You can also visit many bank web sites directly, such as Bank of America, Citi Bank, Wells Fargo, Discover, First National Bank of Omaha, and others to see if they are offering new customers an opportunity to get a credit card with a low interest rate or even zero percent for new purchases. Remember: a credit card that offers a low interest or zero percent on new purchases for one year is a real deal – better than a credit card that offers you low interest or zero percent on balance transfers or cash advances because you must usually pay a one-time service fee for those.

Important Note: If you do your own web research to find other zero percent credit cards, be sure you are dealing a trustworthy, secure web site that is not phishing for your information. There are many (REPEAT: MANY) fraudulent web sites that are trying to obtain your personal information in order to steal your identity.

Do you belong to a credit union? If you do, you may be able to get a credit card or a personal loan through them. Credit unions are membership organizations that offer much better financial rates than banks. Most offer savings accounts, home mortgages, home equity loans, credit cards, and car loans. You can usually find much better rates for any of your financial needs at a credit union.

Credit unions usually you to be affiliated with an institution or company that they service, such as your employer or an association. However, many of them have ways to go around their membership requirement. For example, an excellent credit union is PenFed, which stands for Pentagon Federal (see https://www.penfed.org/). This credit union is for members and families of the U.S. military services, the Pentagon, and other affiliated associations. However, even if you are not eligible to join from one of these groups, you can become a member of this credit union by joining either the National Military Family Association or Voices for America’s Troops. These organizations require you to pay a small amount in yearly dues, but by joining them, you b become eligible to be a member of PenFed Credit Union.

If you are veteran, you may be eligible for business loans or grants. Check with your state veterans affairs office.

There are also various other sources of potential funding for people who want to start a business. These are a few of the web sites that connect people who need business loans with investors, but be sure to do your due diligence and make sure you are comfortable working through these sources:
http://www.prosper.com/ .
http://www.smallbusinessloans.com/ .
http://www.businessfinance.com/ .