Bootstrapping typically means relying on one’s self to reach a goal. In business, bootstrapping is generally used to describe entrepreneurs who use their own personal funds and resources to start a business instead of raising money through small-business loans or investors.
Whether bootstrapping is your personal preference or your best option to start a business, there are pros and cons to this funding method, as well as some alternatives that might be helpful to consider.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
What is bootstrapping?
Bootstrapping refers to entrepreneurs starting new businesses by relying on their personal resources instead of securing funds through business loans or raising capital through investors. Or, in the case of an existing business, bootstrapping can be used to describe an entrepreneur using the revenue generated by their company, along with personal resources, to grow the business.
Some personal resources that may be used in bootstrapping include:
Personal savings.
Personal credit cards.
Personal loans, including home equity loans.
Personal spaces such as an extra room or garage.
Personal assets like equipment and supplies.
Pros and cons of bootstrapping
Pros
Owner retains full control of the business.
No business loan debt is taken on by the company.
Accrue time in business and revenue to help qualify for future funding.
Cons
Business growth may be limited due to lack of funds.
Personal assets, such as savings and retirement, could be at risk.
Doesn’t typically build business credit history.
Why do entrepreneurs choose bootstrapping?
For some entrepreneurs, bootstrapping is a personal preference and for others it may be their only option for launching a new business or growing an existing one.
Here are some reasons entrepreneurs may use bootstrapping to start their business:
Can’t qualify for a business loan
One of the top reasons budding entrepreneurs turn to bootstrapping is because they can’t qualify for a startup business loan. They may not be able to meet lender requirements for time in business, credit score and annual revenue, among other things.
Banks and SBA lenders — lenders that offer loans guaranteed by the Small Business Administration — generally have competitive rates and terms. However, to qualify for funding, you’ll typically need multiple years in business, in addition to good credit. For example, a Wells Fargo BusinessLine line of credit requires a credit score of at least 680 and two years in business.
Online business loans are typically easier to qualify for than bank loans; however, approval can still be a challenge for brand-new businesses. For example, Fora Financial offers business loans for bad credit with a minimum credit score requirement of 500 but also a minimum of six months in business.
Don’t want to take on additional debt
Entrepreneurs who could qualify for a business loan may choose bootstrapping because they don’t want to take on business debt and the interest expense and additional fees that come with a loan.
Business loan interest rates vary based on a number of factors. However, according to the most recent data from the Federal Reserve, interest rates on the average small-business bank loan ranged from 6.13% to 12.36% in the fourth quarter of 2023
. Other types of loans, including online loans, can have even higher interest rates.
In addition to interest, borrowers often have to pay fees like a business loan origination fee. Interest and fees may push the total cost of the loan beyond what an entrepreneur is willing to pay.
Don’t want to give up full control of the business
Entrepreneurs who have ruled out debt financing may have the option of raising money through equity financing — selling shares in their business to investors in exchange for funding. While equity financing doesn’t require taking on debt or making loan repayments, some entrepreneurs may still prefer bootstrapping.
When an entrepreneur sells shares in their business, they exchange partial business ownership for the investor’s funding. And, depending on the number of shares sold and the investor’s goals, the entrepreneur may no longer have full independence to run the company their way. They’ll also have to share the profits if the business succeeds.
Want to test the business idea before fully committing
Bootstrapping can allow an entrepreneur to try out their business model, refine their marketing strategy and build a customer base before committing to long-term financing or arranging to offer equity to investors. In addition, a business owner may find it easier to qualify for funding from business lenders after they’ve been in operation for at least six months.
Also, some entrepreneurs may not be comfortable quitting a full-time job in order to start a business. Bootstrapping can be a way to get a business off the ground without losing your main source of income.
Advertisement
Est. APR
20.00-50.00%
Est. APR
27.20-99.90%
Est. APR
15.22-45.00%
Min. credit score
625
Min. credit score
625
Min. credit score
660
Bootstrapping tips
The following tips may help you when bootstrapping your business:
1. Create a business plan.
Regardless of how you choose to fund your startup, you’ll need to write a business plan. The plan provides detailed information on your business, such as an executive summary, product description, market analysis, marketing strategy and financial projections.
Your business plan can be used as a guide to set up your business and help you identify your customer base, establish your marketing plan, lay out the organization of your operation and explain how you plan to generate revenue. You’ll typically update your business plan as your company grows.
In addition, if you decide to look for additional funding in the future, you can share your business plan with lenders and investors to show them that you have a profitable operation.
2. Officially launch your business
Bootstrapping may involve starting a scaled-down version of your business where, for example, you operate out of a spare room or use personal funds to buy supplies. However, no matter the size of your operation, you still want to take steps that will make your business official in order to best set it up for future growth.
Some common steps to take when launching a business:
3. Lay the groundwork for a future business loan
Bootstrapping is often used to get a business up and running; however, it’s not always the best option for business growth. For some entrepreneurs, bootstrapping may be a short-term option that will help them secure business financing in the future.
Bootstrapping can give you the opportunity to accrue time in business, generate revenue and build a customer base — all things that will make your business more attractive to lenders and investors down the road.
4. Take advantage of free resources
There are organizations that offer free or low-cost training, counseling and other resources to help you start and grow your business.
SBA resource partners are located throughout the U.S. and include Small Business Development Centers, SCORE business mentors, Veterans Business Outreach Centers and Women’s Business Centers, among others.
U.S. Chamber of Commerce chapters provide resources for entrepreneurs including virtual events and networking opportunities within your local community, though a membership fee may be required in some cases.
Industry and trade associations within your local community can provide opportunities to advance your industry knowledge and network through conferences and member events.
Public libraries can also be a resource to small-business entrepreneurs, with some offering online courses, demographic information, business planning tools and suggested reading lists.
Alternatives to bootstrapping
Here are some alternatives you may want to consider before deciding to fund your business on your own:
Business loans. There are many different types of business loans — term loans, lines of credit and equipment loans. Because the qualification requirements for business loans vary by type and lender, exploring a variety of options may allow you to find a loan that works for you and your new business.
Family and friends loans. Asking family members and friends to loan you funds or invest in your startup business is another way to raise money. Although these arrangements are often informal, it’s important to put the details of the funding in writing so there are no misunderstandings in the future.
Small-business grants. Grants can be a source of funding for small businesses, although competition for this “free” money can be fierce and the application process can be time-consuming. However, there are startup business grants offered by government agencies, corporations and nonprofit organizations that may be worth looking into.
Crowdfunding for business. Crowdfunding can be used to create online campaigns to raise money for a business startup, as well as other causes. A unique business idea and a wide network of supporters can help an entrepreneur launch a successful campaign.
Looking for a business loan?
See our overall favorites, or narrow it down by category to find the best options for you.
Two-thirds of business owners who are mothers say creating generational wealth for their children is a major reason they launched their business, according to a survey of 1,000 mothers and business owners conducted for SoFi in March 2024. Nearly half (48%) also expect their kids to take over some day, intending to pass the business onto the next generation.
Even so, nearly half (42%) of entrepreneurs who are mothers feel they are treated differently by society than entrepreneurs who are fathers.
According to the latest Census data, women own 13.8 million businesses across the U.S., employing 10 million workers and generating $3.9 trillion in revenue. Those businesses make up 39.1% of all U.S. businesses, a 13.6% increase from 2019 to 2023, according to the Small Business Administration.
Many entrepreneurs who are mothers – or mompreneurs, a term that was coined in the 1990s – have a long-term plan to grow their business, with 86% of those who have another job saying they want to devote themselves full-time to their own company eventually. More than half are actively working to educate their children on being entrepreneurs themselves.
The challenges in finding a balance between work and home are genuine, however, with mompreneurs feeling shortchanged on both sleep and time to spend with family and friends. And two-thirds feel judged by others for pursuing their entrepreneurial goals while being a parent to begin with.
Source: Based on a survey conducted between March 18-24 2024, of 1,000 female business owners aged 18 and over who have at least one child and live in the U.S.
Young Children and Businesses?
Our survey showed 29% of the respondents said their oldest child was 6 to 10 years old when they started their business, followed by 15% saying their oldest child was a teenager between 13 and 18. Another 14% started their business when their oldest child was just 3 to 5 years old.
A majority (74%) of our respondents were married or living with a partner, and most of the respondents had one child or two. As for the children’s ages, 51% had kids between 5 and 13, and 34% had teenagers between 13 and 18.
Among our survey respondents, the largest age group (37%) was 35 to 44 and the second largest (27%) was 25 to 34. As for education, the largest group (33%) had a university degree, but those who had a high school degree (28%) came in a close second.
Living in the Present, Envisioning a Better Future
A majority of the mompreneurs in this survey said desires for financial independence and personal growth motivated them to launch their own business.
So has being a mother made it harder or easier to run a business? Survey respondents said being a parent enhanced their entrepreneurial skills in a myriad ways:
• Improved problem-solving skills: 60%
• Enhanced multitasking abilities: 51%
• Increased empathy and understanding: 46%
• Greater resilience in the face of challenges: 46%
Two-thirds of respondents (66%) said creating generational wealth for their children was a big reason for launching their business.
And nearly half (48%) said they are confident their children will take over their business eventually. Many mompreneurs are already phasing in their kids when it comes to learning about business.
When asked how they involve their children in entrepreneurial activities, the respondents answered this way (multiple selections were possible):
• Educating them about entrepreneurship: 55%
• Introducing them to the business environment: 43%
• Assigning age-appropriate tasks related to the business: 41%
• Including them in decision-making processes: 31%
Work-Life Balance: Can It Be Found?
Running a business and raising children are tasks that are hard enough, but nearly two-thirds (62%) of survey respondents said they have another job in addition to the business they own. Interestingly, 50% of those with household incomes under $100K don’t have a different job aside from their business, compared to 17% of those with household incomes of over $100K.
Incredibly, for those who had a full-time or part-time job apart from their own small business, 26% still spent between 20 and 30 hours per week on their own company.
Something has to give, timewise, and our survey broke it down. When asked what they have to sacrifice to balance entrepreneurship and parenthood, this is what our respondents said (multiple selections were possible):
• Sleep: 48%
• Spending time with friends and family: 48%
• Hobbies: 38%
• Exercise: 28%
• Diet: 21%
• None of the above – I don’t have to make any sacrifices: 16%
Asked what challenges female entrepreneurs who have children face, they answered as follows (multiple selection were possible):
• Balancing work and family time: 58%
• Balancing multiple roles: 42%
• Managing stress and burnout: 40%
• Access to funding or financial resources: 38%
• Overcoming societal expectations about mothers who start their own businesses: 26%
• Navigating discrimination or bias: 18%
Having help at home in the form of a partner or other adults can go a long way, but 37% of respondents, the largest group, said it was mostly them alone left with the mental load of home responsibilities. However, an even split between the respondent and their partner came in a close second at 35%.
When the mompreneurs did get help, the percentages broke down in interesting ways.
Here’s how partners and extended family members offered support (multiple selections were possible):
• Assisting with childcare during work hours: 30%
• Providing emotional support: 20%
• Collaborating on business-related tasks: 16%
• Helping with housework: 14%
• Offering financial assistance: 11%
In terms of stress relief, respondents said they balanced self-care with roles as parent and entrepreneur:
• Participating in hobbies or leisure activities: 51%
• Scheduled breaks and downtime: 47%
• Regular exercise or physical activity: 45%
• Seeking professional help or counseling: 40%
Gender Disparities Revealed
While women-owned businesses are more prevalent in America than ever before, our respondents said that they experience inequity.
More than two in five respondents (42%) said they felt that entrepreneurs who are mothers are treated differently than entrepreneurs who are fathers. Only one in five (21%) said they thought mothers and fathers who owned business were treated equally.
More than 60% of mompreneurs said they felt “judged by others for pursuing entrepreneurial goals while being a parent.”
Making matters worse, the respondents said that this disapproval came into play if they sought financial support to grow their business.
When asked if they felt that being an entrepreneur and parent has affected their access to venture capital or other forms of financial support for their business, they answered:
• Yes: 43%
• No: 34%
• I haven’t tried to secure additional funding for my business: 21%
The Takeaway
Women own 13.8 million businesses in the United States, making up 39.1% of all businesses. Their numbers keep growing, yet nearly half of these mompreneurs feel society treats them differently than owners who are fathers, and balancing work and home is a challenge.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.
SoFi’s marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Inside: Embark on a profitable journey with our guide on starting a bookkeeping business. Find the steps on how to become a bookkeeper and find success.
Starting a bookkeeping business from scratch can be an exciting yet nerve-wracking venture.
For many budding entrepreneurs, the formidable task of setting up a business adds a mix of anxiety and anticipation. The initial trepidation often stems from dealing with the unknowns of a new venture and the pressure of ensuring meticulous financial management of someone else’s finances.
However, with thorough planning and an understanding of the essential steps, such as crafting a solid business plan and obtaining the necessary certifications, these nerves can be managed.
By embracing your entrepreneurial spirit and equipping yourself with the right knowledge, you can lay a strong foundation for a successful bookkeeping business.
Plus it is easier to get started than you thought…
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is a bookkeeping business?
At its core, a bookkeeping business manages the financial records of other businesses. They ensure accuracy, track receipts and expenses, and prepare financial statements – the financial bedrock upon which enterprises stand.
With an emphasis on accuracy and organization, they are responsible for keeping the financial data up to date and available for strategic decisions.
For many, this is a popular way to make money online.
Earn Extra Income with Bookkeeping
Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.
Find out TODAY if this is THE business you’ve been looking for.
Show Me How
First Steps to Starting a Bookkeeping Business
Craft a Comprehensive Business Plan for Success
Your roadmap to success begins with a business plan. This document is crucial—it outlines your vision, goals, unique value proposition, target market, competitive landscape, marketing strategies, and detailed financial forecasts. Think of it as your strategic compass guiding you from startup to growth.
This takes your side hustle to an actual living thriving business.
Remember, your business plan is a living document. You must regularly review and update your business plan will help you stay on track toward your business objectives and adjust course as necessary to meet new challenges or opportunities.
Acquire Essential Certifications and Training
By obtaining the right certifications and training, you not only perfect your craft but also send a message of reliability and professionalism to prospective clients. While this may require an investment of time and resources, the credibility and expertise you gain are invaluable assets for your bookkeeping business.
Select bookkeeping courses that cover crucial topics such as accounting principles, financial statements, tax preparation, and accounting software. This education will deepen your understanding and sharpen your skills.
Stay updated with continuing professional education (CPE) credits to keep your certifications active and your knowledge fresh.
Familiarize yourself with popular bookkeeping software that you’ll use day-to-day. Being proficient in these tools will increase your efficiency and accuracy—qualities clients highly value.
Once certified, don’t forget to prominently display your credentials on your website and marketing materials. This can significantly bolster potential clients’ trust in your abilities and help establish your reputation as a qualified bookkeeping professional.
Bookkeepers.com Online Courses
Learn what you need to start your very own virtual bookkeeping business.
An overview of the bookkeeping business so you can see if it is right for you.
The tools you need to “wow” clients and get paid for your services and
How to create a steady stream of new clients without the need to “sell” yourself.
Learn More
Legal Considerations and Compliance
Setting the legal foundation for your bookkeeping business is not just a formality—it’s about protecting your operations and establishing credibility.
Register Your Business and Secure the Necessary Permits
Let’s look at the essential steps to ensure your business is registered correctly and fully compliant with regulatory requirements.
Choose a Business Structure: Decide whether an LLC, sole proprietorship, partnership, or corporation best suits your needs.
Register Your Business Name: This is a crucial branding element. Check for name availability and register it with the appropriate state agency, ensuring it’s unique and resonates with your target market.
Obtain an EIN: If you’re in the U.S., you’ll need an Employer Identification Number (EIN) for tax purposes, especially if you plan to hire employees. This number is also often required to open a business bank account and apply for business licenses.
Apply for Licenses and Permits: Depending on your location and the structure of your business, you may need various licenses and permits. Check local and state regulations to ensure you meet all legal requirements.
Register for State Taxes: If applicable, register for your state’s tax structure. This may include sales tax, unemployment insurance tax, and other business-related taxes.
Comply with Local Regulations: Ensure you’re familiar with local zoning laws if operating from home, and obtain a Certificate of Occupancy if required. If you’re part of a homeowners’ association, review any stipulations they might have on home-based businesses.
Understand Ongoing Compliance: Be aware of annual filings, renewals for licenses and permits, and other regulatory commitments to maintain compliance.
By being diligent with these legal prerequisites, you’re not just following the rules—you’re also sending a clear message about your professionalism and attention to detail.
Protect Your Endeavors with the Right Insurance
Insurance is the safety net that can save your bookkeeping business from unexpected financial challenges. It’s not about expecting the worst; it’s about being prepared for any situation that could undermine the stability and reputation of your business.
General Liability Insurance: This covers a broad range of issues, including bodily injury or property damage claims made by others.
Cyber Liability Insurance: As a bookkeeper dealing with sensitive data, you’ll want protection against cyber threats and data breaches.
Property Insurance: If you have a physical office or own valuable equipment, property insurance can cover losses from events like fire or theft.
By integrating the right insurance policies into your business strategy, you set up a protective fortress around the hard work and dedication you put into your bookkeeping business. Insurance should not be perceived as an unnecessary expense but rather as a prudent investment in your business’s longevity and reputation.
Setting Up Shop
Establishing a Home Office vs. Renting Space
Choosing the right environment for your bookkeeping business is a balancing act between professionalism, cost-effectiveness, and personal working style. Whether you decide on a home office or opt for a rented space, the decision will significantly impact your operations.
Home Office Advantages
Renting Space Advantages
Cost Savings: Eliminate commuting costs and monthly rent, channeling those savings back into your business.
Professionalism: A commercial office can provide a more professional setting for client meetings and create a clear boundary between work and home life.
Convenience: Enjoy the flexibility of setting your own hours and working in a stress-free environment.
Networking Opportunities: Proximity to other businesses in shared office spaces can foster relationships and potential client referrals.
Tax Deductions: You may be eligible for home office tax deductions, saving you money during tax season.
Amenities: Rented spaces often come with value-added services like receptionists or conference rooms.
Home Office Disadvantages
Renting Space Disadvantages
Distractions: Domestic life can disrupt your work, impacting productivity.
Overhead Costs: Monthly rent and utility bills will add to your business expenses.
Professional Image: Having a dedicated business address and separate workspace can often project a more professional image to clients.
Long-term Commitments: Leases typically require a long-term commitment that may be risky if your business circumstances change.
Ultimately, the decision depends on the nature of your clientele, your personal work preferences, and your budget. Also, this is great for a stay at home mom to make money.
Many bookkeepers find success starting with a home office and transitioning to rented space as the business expands. Others may find that a small rented office fits their needs right from the onset, or that a virtual office setup provides the perfect middle ground.
Selecting State-of-the-Art Bookkeeping Software
With the right bookkeeping software, you can streamline your operations, foster transparency with clients, and confidently tackle complex financial scenarios.
Adopting top-notch software will serve as both a foundation and a catalyst for your bookkeeping business, ensuring you remain competitive and responsive in a rapidly evolving industry.
Look into popular bookkeeping software such as QuickBooks Online, Xero, FreshBooks, and MYOB. Compare them based on features, ease of use, scalability, and customer support.
By taking the time to carefully weigh these factors, you will be better positioned to select bookkeeping software that not only meets your current needs but also supports your business as it expands.
Financial Foundations for Your Firm
Unravel Funding Options and Small Business Loans
Before seeking funding, calculate your startup costs including equipment, software subscriptions, legal fees, marketing, and initial operating expenses. This will help you understand how much capital you need to secure.
Typically, you should be able to start your bookkeeping business with little investment and add additional expenses as you grow.
If needed, there are a variety of funding sources available for new businesses. Research options like traditional bank loans, credit unions, Small Business Administration (SBA) loans, online lenders, and crowdfunding. When applying for loans or pitching to investors, a comprehensive business plan is essential. It should outline your business concept, financial projections, and growth strategy to demonstrate the viability and potential profitability of your bookkeeping business.
Smart Money Management from the Start
Establishing smart money management practices from the very inception is the same as being financially sound with your personal finances.
Open a Dedicated Business Bank Account: Keep your personal and business finances separate. This is fundamental for accurate bookkeeping and simplifies your tax situation come year-end.
Start With a Budget: Even before your first client, create a realistic budget for your business. Know the costs of all aspects, including marketing, equipment, insurance, and any other operational expenses. This will help prevent overspending and ensure your resources are allocated effectively.
Use the Profit First Formula: This simple formula will help you to pay yourself as well as have enough money for operational expenses and to pay your self-employment taxes.
By establishing and maintaining these smart money management practices from the outset, you’re not just safeguarding your bookkeeping business against common financial pitfalls—you’re also building a foundation for a prosperous financial future.
Marketing Your Bookkeeper Business
Digital Presence: Creating a Website That Converts
In today’s digital-first world, your website often makes the first impression for your bookkeeping business. It’s not just an online brochure; it’s a crucial tool engineered to turn visitors into leads and leads into loyal clients.
User-Friendly Design: Your website should be easy to navigate with a clean layout that directs visitors naturally from one section to the next. Prioritize quick load times and mobile responsiveness with Kadence to cater to all potential clients.
Clear Value Proposition: Immediately communicate what you offer and why a potential client should choose your bookkeeping services. Highlight your unique selling points front and center on the homepage.
Strong Call-to-Actions (CTAs): Use compelling CTAs to guide visitors towards taking action, whether that’s contacting you, scheduling a consultation, or signing up for your newsletter. Make it easy for them to engage with you.
Client Testimonials and Case Studies: Social proof can be incredibly persuasive. Showcase positive reviews, client testimonials, and case studies to build trust and credibility with prospective clients.
With a well-crafted website, your bookkeeping business demonstrates its expertise and readiness to cater to client needs, no matter where they are in their financial journey.
Networking and Navigating Social Media Strategies
Building a robust network and mastering social media can turbocharge your bookkeeping business’s growth. It positions you not just as a service provider, but as a thought leader in your field.
Identify the Right Platforms: Choose one or two social media platforms where your target audience is most active. LinkedIn, for instance, is a goldmine for professional networking, while Instagram can showcase your brand’s personality.
Create Valuable Content: Share content that resonates with your audience — tips to manage business finances, tax updates, or insights into bookkeeping trends. This positions you as an expert and invites engagement.
Engage Actively: Don’t just post and disappear; interact with your followers. Answer questions, join discussions, and show appreciation for their engagement. Building relationships is key to networking success.
Leverage Professional Groups and Forums: Beyond your own social channels, be active in online groups or forums related to bookkeeping and your clients’ industries to expand your visibility and establish credibility.
Your network and social media are not just channels for promoting your services; they’re platforms for sharing your expertise, engaging with peers and potential clients, and building a community around your bookkeeping brand.
Bookkeeping Startup Pricing, Clients, and Growth
Determining Competitive Rates for Your Services
Setting competitive, yet fair pricing for your bookkeeping services is a balancing act that ensures value for your clients and viability for your business.
Let’s explore how to establish a rate structure that meets the market demands and supports your financial goals.
Market Research: Begin by understanding what other bookkeepers in your area or within your niche are charging. This insight will help you benchmark your rates competitively. Keep in mind factors like experience, specialization, and location.
Value Your Expertise: Assess your qualifications, experience, and the quality of services you offer. Clients are willing to pay for the value you bring to their business, so price your services accordingly.
Consider Your Costs: Ensure your rates cover your expenses, including software subscriptions, continuing education, insurance, and taxes, while also leaving room for profit.
Pricing Models: Decide whether you’ll charge hourly, offer flat-fee packages, or adopt a value-based pricing model. Each model has its advantages and can be chosen based on the type of service or client preferences.
Communicate Your Pricing Clearly: Be transparent with clients about your rates. Clear communication prevents misunderstandings and builds trust from the outset. [Placeholder for sample pricing page]
Within your pricing strategy, consider the lifetime value of client relationships and the potential for added services down the line.
How will you find clients for your bookkeeping business?
Finding clients is the engine that powers your bookkeeping business and your income. With a strategic combination of diligent networking, tactical marketing, and leveraging existing relationships, you can start building your client base.
Utilize Online Platforms: Websites like Upwork, Fiverr, and LinkedIn can connect you with businesses looking for bookkeeping services.
Local Business Outreach: Approach local businesses directly. Offer to discuss how your bookkeeping services can alleviate their financial stress and add value to their operations.
Referral Program: Encourage word-of-mouth by setting up a referral program. Incentivize your current clients or network to refer others to you.
Social Media and Content Marketing: Create and share engaging content on your social media profiles to build brand awareness.
Community Involvement: Join local business associations, attend chamber of commerce events, or contribute to community projects. These can lead to connections and opportunities.
Offer Free Workshops or Webinars: By providing value upfront through informative sessions on bookkeeping and financial management, you can attract potential clients who are interested in improving their business finances. Also, you can partner with other professionals.
Professional Partnerships: Build relationships with accountants, lawyers, and business consultants who might not offer bookkeeping services but can refer their clients to you.
With a consistent and strategic approach, you can attract and retain the clients that are the best fit for your business, ultimately building a robust client portfolio. Remember, it’s not just about finding any clients—it’s about finding the right clients who treasure you.
Discovering and Retaining Your Ideal Clientele
Attracting clients is one feat, but discovering and retaining those who are the perfect fit for your bookkeeping business is where the real growth happens.
Offer Customized Solutions: Set yourself apart by tailoring your services to meet the specific needs of your clients. Show that you understand their industry and are invested in their success.
Provide Exceptional Service: Consistently deliver high-quality work, be responsive, and proactively address your clients’ needs. Clients will stay with a bookkeeper who goes above and beyond.
Host Client Appreciation Events: Small gestures of appreciation or exclusive events can strengthen business relationships and foster client loyalty.
Stay on Top of Industry Trends: Being knowledgeable about your clients’ industries can make you indispensable. Offer insights that can help them stay ahead of the curve.
Stay Ahead in the Bookkeeping Scene
Continuous Learning and Leveraging Industry Trends
The bookkeeping industry doesn’t stand still, and neither should you. Continuous learning keeps you at the forefront of evolving practices, ensuring your services remain relevant and your advice sound.
Keep Abreast of Regulatory Changes: Tax laws, financial regulations, and compliance standards can affect your clients; stay updated through webinars, online courses, and industry news.
Embrace Technological Innovations: New software and tools can streamline bookkeeping tasks. Be open to adopting tech that can improve your efficiency and the services you provide.
Participate in Professional Development: Attend workshops, seminars, and conferences geared toward bookkeeping professionals. Networking with peers can also uncover new trends and techniques.
By maintaining a commitment to continuous learning, you not only improve your own skillset but also enhance the overall value of your bookkeeping services.
Join Professional Associations for Peer Support
Being part of a professional association offers more than just credentials; it’s a direct line to a community of peers who can share insights, resources, and support as you build and grow your bookkeeping business.
By joining professional associations such as the American Institute of Professional Bookkeepers (AIPB) or the National Association of Certified Public Bookkeepers (NACPB), you demonstrate a commitment to professionalism and continuous improvement. These affiliations provide a wealth of resources to support you in delivering high-quality services and growing a thriving bookkeeping business.
Plus you can take advantage of seminars, webinars, and certification courses offered by associations to further your education and maintain any required continuing education credits.
Bookkeepers.com Online Courses
Learn what you need to start your very own virtual bookkeeping business.
An overview of the bookkeeping business so you can see if it is right for you.
The tools you need to “wow” clients and get paid for your services and
How to create a steady stream of new clients without the need to “sell” yourself.
Frequently Asked Questions (FAQs)
Yes, a bookkeeping business can certainly be profitable. It offers a low overhead cost model, recurring revenue opportunities through ongoing client relationships, and the potential to scale services.
With diligent financial management and strategic growth, profitability can be substantial.
While a degree is beneficial for deep knowledge, it’s not mandatory. Certification and practical experience can often suffice in starting a successful bookkeeping business.
In fact, this is one of the best low stress jobs without a degree.
Begin by gaining an understanding of bookkeeping principles, getting certified, investing in software, and slowly building up your clientele with strategic marketing and networking.
Ready to Open Bookkeeping Business?
Starting your own bookkeeping business can be a fruitful endeavor with the right preparation and education.
This guide outlines the key steps and provides direction on how to start a bookkeeping business, ensuring you cover all essential elements for a successful launch. With focus and attention to these structured steps, you’ll be well on your way to establishing a thriving bookkeeping business.
Still on the fence? Check out this free bookkeeping webinar to learn more.
With the right preparation, tools, and mindset, you can launch a thriving venture that supports businesses in their financial journey while growing your own entrepreneurial dreams.
Embrace the adventure—your future in finance awaits!
Just remember if you are looking for ways to make money fast, this one comes with patience and perseverance to make things happen.
Earn Extra Income with Bookkeeping
Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.
Find out TODAY if this is THE business you’ve been looking for.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
If you want to start a business, one thought may go through your mind (particularly if you’re funding your business out of pocket): “If I didn’t have to repay my student loans, I’d have more money to put toward my business.”
No doubt about it, student debt can be steep. The current average federal student loan debt per borrower is $37,338 and $54,921 per private loan borrower. Student loan borrowers who feel stymied by their debt may wonder how to get their business idea off the ground.
If student loans gobble up a chunk of your cash every month, refinancing might free up funds to put your fledgling business on the right track. Read on to learn how refinancing student loans can benefit the launch of your new business.
What Is Student Loan Refinancing?
Before diving into the definition of student loan refinancing, let’s discuss the components that make up a student loan: principal, interest rate, and loan term.
• Principal: The principal is the original amount that you borrowed, which you will repay with interest over time.
• Interest rate: The interest rate is a percentage of the loan principal that you pay monthly — on top of a portion of the principal. This is charged by the lender and is how they earn money while lending you cash.
• Loan term: The loan term is the amount of time in which you will repay your loan.
Student loan refinancing means replacing your existing student loan with a new student loan. You can refinance either federal or private loans with funds from a private lender. There are two important points to keep in mind if you are considering refinancing. These factors can help you determine if refinancing is a good fit for you.
• When you refinance federal loans with a private loan, you forfeit federal protections and benefits, such as deferment and forbearance.
• If you refinance for an extended term, you may end up paying more in interest over the life of the loan, even if your monthly payment is lower.
💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.
Benefits of Student Loan Refinancing
Some of the key reasons to refinance your student loans include the following:
• Potentially lowering your interest rate: Reducing your interest rate on your student loans can save you a lot of money over time because you won’t pay as much in interest per monthly payment. Check with various lenders to ensure you’re getting the lowest interest rate possible. You can usually get the best rates by having a strong credit score and a steady source of income. Your credit score is the three-digit number that reflects how well you’ve paid back debts in the past.
• Reducing your monthly payment: When you work with a lender to extend your loan term, you may reduce your student loan payments per month. For example, you may extend your loan term from 10 years to 15 years, though the specific options will depend on your lender. Note, however, as mentioned above, that extending your term often means you’re likely paying more interest over the life of your loan.
• Obtaining a single monthly payment: Instead of making multiple monthly payments, you can refinance and make one monthly payment. Sticking to one monthly payment can help you stay organized and make your payments on time. You don’t have to refinance all of your student loans, however. For example, if you have five student loans and you have a low interest rate on one and a high interest rate on the rest, you could refinance just those four. Use a student loan refinance calculator to determine how different refinance scenarios might work to your advantage.
• Choosing between variable- and fixed-rate loans: Refinancing may allow you to choose between a fixed- or variable-rate loan. A fixed-rate means your interest rate stays the same throughout the life of the loan, while a variable rate changes — and could increase or fall over time.
Note that you can also consolidate student loans, which involves combining several federal student loans into one loan, through the Direct Loan Program. 💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.
How Refinancing Student Loans Can Benefit a New Business
So, how exactly does refinancing student loans benefit a new business? Here’s a closer look.
1. Lower Your Loan Payments
As mentioned earlier, refinancing can help lower your loan payments by possibly offering a lower interest rate and/or by stretching out your loan term. Lowering your monthly payments can allow you to devote more financial resources toward your new business. You can also use the extra money to pay for household expenses or financial goals, like the down payment on a house or your retirement nest egg.
2. More Money to Get Business Loan
First, to clarify: Using student loans to start a business is a no-go. Student loan money should go toward education costs, living expenses, and housing. When you refinance, you can lower your monthly repayment amount. That can help your overall financial outlook. Then, if you apply for a business loan, you may have a more creditworthy profile.
A bank or credit union will review your financial information to evaluate your qualifications for a business loan. If you refinance your student loans and lower your monthly payment, that could help improve your debt-to-income ratio (DTI), an important indicator when you apply for a loan. Your DTI is calculated by all your monthly debt payments divided by your gross monthly income. If you lower a component of your monthly debt (say, your student loan), you can lower your overall DTI, which is a positive.
3. Use Business Income to Pay Student Loans
Are you wondering, “Can my business pay my student loans?” The answer to that is “no,” if you mean pay directly through your enterprise. However, if you launch a business and earn income, of course you can use your pay to eliminate your debt, whether from a student loan or another source.
Keep in mind that as a business owner, you could get tax breaks that other taxpayers can’t claim, but you can’t deduct the principal payments you make on student loans.
Recommended: How to Get Out of Student Loan Debt
Refinancing Student Loans With SoFi
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
Can you start a business if you have student loans?
Yes, you can start a business if you have student loans, but it may be harder to access business credit and save cash to put toward your business. No matter what, you must keep up with your student loan payments. Not making your payments can hurt your credit score later, which in turn can hurt your application for a small business loan.
How do I start a student loan?
You can apply for federal student loans by filing the Free Application for Federal Student Aid (FAFSA), which helps determine the amount of federal student aid you can receive. You can apply for private student loans on lender websites.
Can I get an SBA loan with defaulted student loans?
Through the Small Business Administration, SBA loans require potential borrowers to keep up to date on student loan payments. Unfortunately, you could become ineligible with defaulted student loans.
Photo credit: iStock/ferrantraite
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Student Loan Refinance If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
FEMA works closely with the US Small Business Administration, which provides low-interest disaster loans for homeowners, renters, businesses and nonprofit organizations.
SBA disaster loans may cover losses that are not fully covered by insurance or other sources. The US Small Business Administration is the largest source of federal disaster recovery funds for survivors.
After applying for disaster assistance from FEMA, individuals may be referred to the administration. Those who receive an SBA disaster loan application are encouraged to fill it out and return it.
ARTICLE CONTINUES BELOW AD
ARTICLE CONTINUES BELOW AD
Failure to return the SBA loan application may disqualify applicants from other possible financial assistance from FEMA or other financial resources.
For small businesses, small agricultural cooperatives, small aquaculture businesses and most private nonprofit organizations, the US Small Business Administration offers Economic Injury Disaster Loans to help meet working capital needs caused by the wildfires. Economic Injury Disaster Loan assistance is available regardless of whether the business suffered any physical property damage.
The US Small Business Administration provides the following disaster loans for those impacted by the Maui wildfires:
Home Loans: Home loans up to $500,000 for the repair or replacement of real estate and up to $100,000 to repair or replace personal property such as clothing, furniture, appliances or cars for both homeowners and renters.
Business Loans: Up to $2 million for the repair or replacement of real estate, inventories, machinery, equipment and all other physical losses.
Economic Injury Disaster Loans: Up to $2 million for alleviating economic injury caused to businesses by the wildfires.
After a disaster is declared, an SBA disaster loan may be increased by up to 20% of verified disaster damage to cover improvements that will reduce risks from future damage.
ARTICLE CONTINUES BELOW AD
SBA Business Recovery Centers provide in-person support to wildfire survivors in Honolulu and Maui counties. Maui homeowners, renters and business owners who have been displaced and businesses with working capital needs caused by the wildfires can visit a Business Recovery Center. Small business owners from the Big Island, Kaua‘i or O‘ahu are also welcomed to visit the centers.
US Small Business Administration representatives will answer questions about SBA’s disaster loan program, explain the application process and help each business owner and resident complete their electronic loan application.
Maui CountySBA Business Recovery Center:
Hawaiʻi Technology Development Corp.: Maui Research Technology Center Building A, Suite 119 (Conference Room), 590 Lipoa Parkway in Kīhei.
Regular Hours: 8 a.m. to 5 p.m. Monday to Friday; 10 a.m. to 2 p.m. Saturday (closed: Veterans’ Day, Nov. 10)
ARTICLE CONTINUES BELOW AD
Applicants may apply online, receive additional disaster assistance information and download applications at https://www.sba.gov/hawaii-wildfires.
Applicants may also call the SBA’s Customer Service Center at 800-659-2955, or email [email protected] for more information on the SBA’s disaster assistance.
Marketing is an expense, but it can also be considered an investment in the success of your small business. When done correctly, it can build your brand, draw prospective customers to your website or store, and ultimately drive revenue.
To make the most of your marketing dollars and successfully promote your small business, you’ll want to avoid the following mistakes.
1. Not making market research a priority
Market research, one of the first stages in the marketing process, is used to confirm demand for your business’s product or service, identify its target market and assess competitors.
“If we think of marketing, it’s not only the promotion of services, the promotion only of products. It’s the creation of products. It’s the creation of services. It’s connecting with people,” says Islam Gouda, a marketing scholar and author. “As a small business, I want to understand how my customers are thinking about different aspects in terms of their wants or their needs.”
When researching your target market, consider the platforms and channels they frequent and market your business there.
”Make sure that you’re really focusing on how people are going to find you,” says Jennifer Fortney, president of Cascade Communication, a PR and marketing communications company based in Chicago. Beyond the largest, most popular platforms, Fortney suggests also looking into niche publications and local magazines.
2. Brand inconsistency
“Always have consistent branding across all your channels: your social media, your LinkedIn profile, your website, your brochures, your fliers, whatever it is,” says Vanessa Castillo Bell, a consultant for the Arizona Minority Business Development Agency. “Once you have consistent branding all across your channels, your customers will recognize your brand.”
Establish brand guidelines for the logos, colors, images and text you’ll use across your marketing materials. Consistent branding creates a brand identity that looks professional and can offer benefits such as increased customer trust and loyalty — which can all lead to higher revenue for your business.
3. Not having a clear website strategy
There are many platforms on which to market your business, but your website is especially important. “Businesses own their website. That’s their online home,” Castillo Bell says. Therefore, you have complete control over what information you provide and how.
Castillo Bell recommends learning search engine optimization (SEO) techniques and identifying keywords that your customers would use to search for your products and business. Including those keywords in blogs, newsletters, white papers, videos and other types of content marketing can help your website appear on search engine results pages and gain traffic. Optimizing your website for mobile — since many consumers search online using their phones — is another key step, Castillo Bell says.
You’ll also want to make important details about your business easily accessible to website visitors. “If you’re a local business, be very specific about your location, what areas you serve, and put all of that information on your website,” Fortney says.
Building an effective marketing strategy requires patience; however, a mistake many businesses make is that “they are looking for a quick process,” Gouda says. “They are looking to generate revenue on the spot. They do not wait for return on investment,” he says. Ultimately, “they confuse marketing and sales.”
In reality, the results from your marketing strategy may not be noticeable for months. Researching your target audience, creating consistent messaging in all your marketing materials and exploring free marketing ideas can all help you stay the course.
From Facebook and YouTube to Instagram, TikTok and many more platforms, social media is a great place to market your business. However, trying to build an online presence on multiple channels doesn’t guarantee success.
“Just because a social media outlet or a social media platform exists doesn’t mean you have to use it. If you stretch yourself too thin, you’ll do none of it well,” Fortney says. “Own one. Pick one that’s the best for your business and your product or service, own it.”
After you’ve become successful in managing one platform, consider whether you want to add another social channel to your marketing strategy.
6. Not utilizing free resources
Before paying consultants to help with your marketing strategy, “one resource you should take advantage of is your free agencies,” Castillo Bell says.
The U.S. Small Business Administration, Small Business Development Centers, Minority Business Development Agencies and community development financial institutions, as well as nonprofit organizations for women, minorities and veteran small-business owners, can all be good options when you need free or low-cost help with your marketing plan.
Two weeks since the first report of a wildfire in Lahaina, Hawaii, the scope of the tragedy is coming into focus.
Search teams looked through every single-story residence in the disaster area and found the remains of 115 people. The death toll is likely to grow as teams now look through multi-story residences and commercial properties.
As of Aug. 21, the fire, which began on Aug. 8, was considered 90% contained and has burned through more than 2,100 acres, according to Maui County.
More than 2,000 buildings in Lahaina were destroyed or damaged by the blaze, according to an artificial intelligence model compiled by Esri, a geographic information system software provider.
The AI model reviewed satellite photos of Lahaina before and after the fire and estimated on Aug. 11 that 2,088 structures – about 63% of all structures in the examined area – had been destroyed or damaged.
Most buildings were homes. The Federal Emergency Management Agency estimated on Aug. 12 that the fire had destroyed 1,466 houses; 85% of all structures that were assessed were destroyed.
Based on Esri’s estimates of damaged structures and building types provided by USA Structures, nearly 1,800 residential structures were damaged in the fire. USA Structures is a dataset maintained by the Department of Homeland Security, the Federal Insurance and Mitigation Administration, FEMA, Oak Ridge National Laboratory and the U.S. Geological Survey.
The financial toll of the damage is vast for a town of about 12,000 people. Rebuilding costs could total more than $450 million for residential structures alone, based on Esri’s damage assessment and Maui tax roll data.
That includes $242.1 million in total building value for owner-occupied homes, $136.1 million for non-owner occupied homes, $40.7 million for short-term rentals and $23.2 million for long-term rentals, based on the building values of parcels that overlap Esri’s assessed damaged buildings.
The median residence assessed damaged by the fire was a 62-year-old, three-bedroom, two-bath structure valued at $242,700, excluding land value.
The damage also complicates hundreds of millions of dollars’ worth of mortgages. Lenders originated more than $670 million in mortgages for borrowers to purchase, improve or refinance single-family dwellings in the census tracts covering Lahaina in 2018-2022, the most recent Home Mortgage Disclosure Act data available.
Lenders originated more than 1,200 such loans over that period, led by Bank of Hawaii with 525, First Hawaiian Bank with 490 and HighTechLending Inc. with 470.
Many of the loans loans originated by these lenders were then purchased by Fannie Mae and Freddie Mac.
The Department of Housing and Urban Development has granted homeowners with Home Equity Conversion Mortgages or mortgages insured by the Federal Housing Administration a 90-day moratorium on foreclosures. HUD also announced a package of regulatory and administrative waivers for further assistance to those in the disaster area.
Homeowners may also borrow up to $500,000 to repair or replace their homes in a low-interest disaster loan from the Small Business Administration. Real estate professionals, too, have provided relief funds.
Officials’ primary efforts are still directed towards meeting the immediate needs of people in the disaster area; a full assessment of the damage and what rebuilding will cost will come later.
So far, FEMA has approved more than $5.6 million in assistance to nearly 2,000 households, including more than $2.3 million in initial rental assistance. Maui County officials estimate about 1,900 people are currently sheltered in hotels. The Environmental Protection Agency and Army Corps of Engineers have started debris collection.
Beyond the need for rebuilding, the wildfire’s long-term impact on insurance and affordable housing remain to be seen.
Hawaii is one of several states recently affected by natural disasters, including wildfires.
First Federal Bank will acquire the mortgage division of BNC National Bank, which will give the Florida-headquartered community-based bank a nationwide consumer direct mortgage platform.
The two banks announced they have signed a definitive agreement for First Federal to acquire certain assets and liabilities of BNC National Bank’s mortgage division on Wednesday. The purchase, which includes the bank’s consumer-direct technology platform, is expected to close in the second quarter of 2023.
The BNC platform is expected to transition to the First Federal branch within a few months of closing. Terms of the transaction were not disclosed.
Headquartered in Bismarck, North Dakota, BNC National Bank is a registered bank holding company focused on providing banking and wealth management services to businesses and consumers in its local markets.
“The Board of Directors made the decision to exit our nationwide residential mortgage origination business after extensive deliberations and concluding that this change in strategy is in the best long-term interests of the BNC, its shareholders and the communities we serve,” Michael Vekich, BNC National Bank’s chairman, said in a statement.
As with the entire mortgage industry, BNC National Bank was heavily impacted by rising interest rates last year. The bank’s production volume more than halved to $1.04 billion in 2022 from the previous year’s $2.37 billion, according to data from Modex. NMLS showed the bank has 63 registered loan officers.
First Federal expects to retain substantially all employees to its residential lending team, Paul Ottendorf, division president of First Federal, said.
First Federal Bank, a community-based mutual institution headquartered in Lake City, Florida, has assets of more than $3.6 billion, according to its website. The bank, consisting of 25 branches in the Southeast and operations in the Midwest, serves mortgage, small business administration (SBA) and USDA customers.
First Federal will serve BNC National Bank’s mortgage customers from its existing locations in Overland Park, Kansas; Moline, Illinois and Bismarck, North Dakota locations and in the Phoenix, Arizona market upon completion of the transaction.
Many contract-based businesses face challenges fulfilling their contracts due to the high upfront costs of starting a project and a payment cycle that usually pays for work only after it’s completed. In addition, many banks consider lending to contractors too risky. These factors combined can cause contractor businesses to pass up jobs. Smaller contracting companies, subcontractors and women- and minority-owned contracting businesses are especially susceptible to this fate.
If you’re struggling with cash flow and qualifying for a small-business loan, contractor financing can be an effective way of fulfilling contracts and growing your business.
What is contractor financing?
The term “contractor” usually refers to a general contractor or subcontractor; however, it can refer to anyone whose business model is dependent on contracts with a local or federal government, or with a larger, private corporation. Contractor financing, or contractor mobilization lending, is a specialized form of financing that relies on the value of a contract — rather than business profit — to underwrite a loan.
Contractor financing can also more broadly refer to small-business term loans, equipment loans or lines of credit that are given to contractors. Because many banks won’t lend to contractors, lenders that advertise contractor financing may simply mean that their loan products are open to contractors.
How does contractor financing work?
Rather than using the traditional components of loan underwriting like personal credit, business profit or collateral, contractor financing relies on the value of a contract that has been won by the business to underwrite a loan. Similar to invoice financing or accounts receivable financing, the contract acts as a form of collateral that a lender can use to ensure repayment.
Contract loans are usually short-term — some lasting only as long as the expected timeline of the contract. Their uses are typically limited to contract-related expenses and the repayment terms are structured to align with the contract’s payment terms. The loan amount is typically anywhere from 20%-30% of the total value of the contract.
Contractor loans may be lender-controlled or borrower-controlled. For lender-controlled loans, your lender sets up a separate account and collects money directly from the entity awarding the contract. This allows it to track payments from your client to ensure it gets paid first. A borrower-controlled loan is just the opposite, and repayment functions more like a traditional loan. You are in control of the payments you receive and responsible for making payments to the lender.
When to use contract financing
When you’re looking to scale your business. Seeking larger contracts can ultimately help your business grow but can also result in cash-flow gaps. Using contractor financing to start winning bigger contracts can be an effective growth strategy.
When you can’t qualify for a traditional loan. Because contractor loans rely less on business profit and personal assets, they can be a good option if you’re having trouble qualifying for traditional lending.
When you don’t have financing needs outside of your contract. Because contractor loans are underwritten to a specific contract, their uses are normally limited to that contract. If you have other business financing needs, you may be better off going for a traditional term loan or a line of credit.
If you have a good relationship with your client. Contractor loans work especially well if you trust the client you’re working with. That will not only make the application process easier, it may also demonstrate to the lender that there won’t be any problems with repayment.
What you’ll need to qualify
Ultimately it will depend on the individual lender, but you can generally expect to prepare the following to qualify for a contractor loan:
Proof of awarded contract. Your lender will need to see the terms of the awarded contract so it can do its own research and understand how it can structure the loan to align with the contract.
Business history. Though it’s not weighted as heavily for contractor loans, lenders will still likely want to look at your business’s financial history. They may also request references or proof of previously completed projects.
Contact information for the entity awarding the contract. Especially if your loan is lender-controlled, your lender will want to have a way to contact your client directly. It may want to ask questions about the contract and payment.
Alternatives to contractor financing
In addition to contractor mobilization loans, there are other ways to finance a contract or contract-based business:
Invoice financing
Invoice financing or accounts receivable financing functions similarly to a contractor loan in that your loan amount is secured against unpaid invoices you have coming in. Like contractor financing, it can be effective at filling gaps in cash flow. This type of financing may be better suited for smaller contract-based businesses.
Small-business term loans
Though many turn to contractor loans because they’re having trouble getting traditional term loans, it’s worth checking if you can qualify for term loans first, especially if you have financing needs that extend past one contract. Term loans may also be cheaper in the long run and can help boost your business credit.
SBA loans
SBA 504 loans and 7(a) loans support construction lending and can be a great option if you’re having trouble qualifying through traditional lenders, especially if you’re a smaller company. SBA loans are underwritten by accredited Small Business Administration lenders, so you may be subject to their qualification requirements.
Business lines of credit
Business lines of credit, including business credit cards, can be a great alternative to a short-term contractor loan because they are revolving and can continuously fill cash-flow gaps on multiple contracts. However, if you don’t stay on top of paying down the line of credit, you may run out of hit your limit, and interest can add up quickly.
Small-business grants can provide funding for your business that you won’t need to repay, which can be especially appealing when starting or growing your business in Florida. Business grants are available for a wide range of purposes, from covering administrative costs and business expenses to funding research projects and beautifying the exterior of your storefront.
Our list of small-business grants for Florida businesses includes both state-specific and national options.
Florida small-business grants
These Florida-specific grants set aside for small businesses could be statewide, regional or city-specific, so be sure to read the requirements before devoting time to the application.
Florida High Tech Corridor grant
If your Florida startup is a high-tech company, you might be eligible for a Florida High Tech Corridor grant. These grants are designed for research and development projects and partner businesses with researchers at the University of Central Florida and the University of South Florida. Opportunities are available in 23 Florida counties.
Eligible businesses work with university researchers to create a project plan and budget, as well as to submit the application. Applications are accepted throughout the year. If approved, funds of up to $150,000 are distributed directly to the university research team.
Prospera small-business grants
Prospera has been helping Hispanic entrepreneurs start new businesses in Florida since 1991. This nonprofit economic development organization works with new and existing Hispanic business owners to help ensure they have the tools and resources needed to succeed.
Prospera grants are awarded on an individual basis and provide for professional services related to legal and accounting assessments, business plans, QuickBooks consulting, marketing plans and brand kits at no cost to the business owner.
Enterprise Florida trade grants
Florida export businesses can apply for a variety of business grants through the Florida Export Diversification and Expansion Program. Grants are offered for marketing plans, website localization, market development and trade shows.
Some basic eligibility requirements for an Enterprise Florida trade grant are that the business be located in Florida, be in operation for a minimum of two years, employ between three and 500 workers and have annual sales of $250,000 or more. Each individual grant has additional eligibility requirements.
Florida Small Business Development Center (SBDC) Network
Through the Florida SBDC State Trade Expansion Program, eligible export businesses can be reimbursed for export credit insurance, marketing plan costs and certain expenses related to trade shows and U.S. Department of Commerce promotional events. Limits for reimbursement depend on the expense, but there’s a maximum of $15,000 per funding period. To be eligible for the grant, a business needs to be new to exporting or plan to use exporting to expand their business, among other requirements.
Floridians also have access to professional business consulting services through the SBDC at no cost. Certified consultants can help you with business planning, management, marketing, financial analysis, funding, international trade, cybersecurity and disaster preparedness. Also available are on-demand videos as well as live workshops and seminars, which may require a nominal fee to attend.
City of Orlando Business Assistance Program
The Business Assistance Program (BAP) is a matching grant administered through the Economic Development Department (EDD) with the goal of promoting small-business development and expansion in Orlando, Florida. Business owners will be responsible for 50% of eligible development fees, while the EDD will pay the remaining 50% — up to $20,000.
BAP can be used to help with transportation impact fees, permits and other development fees, as well as improvements such as sidewalk repairs, water line construction, street improvements, landscaping, street lighting, curb improvements and electric vehicle charging infrastructure.
Small-business owners must get city approval and the proper permits for their project before they can receive financing. Businesses must be located or relocating to the city of Orlando and be a small business as defined by the U.S. Small Business Administration.
North Miami Community Redevelopment Agency grants
North Miami CRA, an independent government agency, offers a number of commercial grant programs, including the Business Attraction Grant, Beautification and Enhancement Grant, Rehabilitation Grant and Capacity Building/Retention Grant. Grant maximum amounts range from $7,500 to $150,000, depending on the program.
Each program has specific requirements, but general eligibility requirements include that the business be within (or moving to a building within) the designated North Miami geographic boundary and the projects must show benefits to the community. The Business Attraction Grant and the Rehabilitation Grant require a 50% match by the business.
National grants available to Florida small businesses
You may also want to consider these national business grants to help fund your Florida small business.
WomensNet grants
Women entrepreneurs and small-business owners in Florida should be aware of the grants offered by WomensNet. This includes Amber Grant awards of $10,000 or $1,000 each month and a year-end Amber Grant worth $25,000. Other grants include the $10,000 Startup Grant awarded quarterly, $10,000 Business Category Grant awarded monthly and the annual Marketing Grant for marketing planning support.
To be eligible, a business needs to be at least 50% woman-owned and based in the U.S. or Canada. By completing one application, you’ll be considered for all the available grants. In addition to contact information, the application will ask you to explain your business and how you would spend the grant money. There is an application fee of $15.
National Association for the Self-Employed (NASE) grant
NASE offers business development grants of up to $4,000 to small businesses and startups based in the U.S. It has awarded almost $1 million in small-business grants since the program began in 2006.
To be eligible for a NASE Growth Grant, you must be an active member of the organization for at least 90 days. In addition, you must demonstrate financial need, provide details on how your business will use the grant money, describe how receiving this grant will help your business thrive and provide a copy of your company’s business plan. You can join NASE for $11.95 a month.
FedEx Small Business Grant Contest
The FedEx Small Business Grant Contest awards grants to small businesses across the U.S. each year. Typically, FedEx reserves this grant money for small businesses with innovative ideas and those demonstrating the greatest financial need. In 2023, FedEx named 10 grand prize winners to receive $30,000 and $1,000 in print services through this program.
Your business must be for-profit and have fewer than 99 employees to be eligible for the grant. Also, you’ll need to open and use a FedEx business shipping account. Additional eligibility requirements may apply.
America’s Seed Fund
Through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, America’s Seed Fund offers grants designed to help U.S. small businesses in the technology sector.
For your business to be eligible for this grant, it must be U.S.-owned, for-profit and focused on research and development. You also must have fewer than 500 employees. To apply, you’ll submit a proposal that will be reviewed and may receive feedback to further refine your concept. Award amounts can range from $50,000 to nearly $2 million, depending on the phase of development.
Tips to find the right Florida small-business grant for you
The process of applying for small business grants may seem challenging, particularly as you’re trying to get your business off the ground. Here are some tips to keep in mind as you explore grant opportunities.
Schedule time for grant applications
Because starting a new business is often extremely time-consuming, it can be helpful to schedule time once a week or more to search for and apply to eligible grant opportunities. Be sure to thoroughly research eligibility requirements to ensure your company fits all of the grant’s criteria before allocating time to the application process.
Expand your search efforts
Look into local small-business grants in your area as well as explore demographic-specific searches that may apply to you or your business, such as:
Weigh grant application fees
Another important factor in applying for small-business grants in Florida is considering application fees. When you research eligible grants, consider the cost of applying versus the benefits you’ll receive. Keeping track of all possible grants you’ve researched, as well as their fees, can help you prioritize your application for affordable or no-cost grants.
Keep alternative funding in mind
Applying for small-business grants in Florida does not guarantee you’ll receive assistance or the amount you wanted. Grants are especially competitive because they provide debt-free funding. If you don’t receive grant money for your Florida business, there are other funding options to explore. Consider small-business loans, such as SBA loans. Your local Florida small-business bank may also be able to connect you to opportunities. Additionally, you may want to consider business credit cards or crowdfunding options to help fund your business.
Courtney Johnston, a freelance writer, contributed to this article.
A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.