How To Self-Fund a New Business

There are quite a few reasons that if you’re planning to start a business, you might want to self-fund it. First and foremost, when you’re self-financing, you don’t have to eventually think about paying back loans from the bank or friends and family.

It’s also in many ways the fastest, easiest way to get funding. You’re not trying to convince people to give you money, and you’re not waiting for a bank to approve you.

Beyond that, one of the biggest benefits of self-funding a new business is that you don’t have to think about adding shareholders or partners. That can make building and growing the business difficult, and you might make some bad tradeoffs to get funding.

While self-funding has a lot of benefits, you probably don’t just have a ton of extra cash lying around. If you did, you might not even be as interested in starting a business.

The following are some realistic ways you can self-fund, without having to give away your entire business or making compromises you aren’t comfortable with.

Get a Gig

If you want to self-fund a business, you may need to add some extra income into the mix while you’re doing it. There are plenty of options in the gig economy like food delivery, package delivery, and rideshare.

You can use a resource like Ridester for a promo code, and get started as a driver. Make a plan to set aside all of your extra earnings as going toward your new business venture.

The good thing about the gig economy is that it gives you plenty of schedule flexibility if you’re also working full-time.

Using a Retirement Account

Along with looking for ways to earn extra money to start a business, you can also fund a business using an existing retirement account like an IRA or 401(k).

A Rollover for Business Startups (ROBS) is an option that lets you use your retirement account without taxes and early withdrawal penalties. You can use this option to start a business as well as to buy an existing business.

This isn’t a loan, and a lot of people like this option because they don’t start out their new venture already in debt. To use this option you do have to have a certain amount in your retirement account, and you have to be a full-time employee of the company you’re starting.

Cash-Value Life Insurance

Another option for self-financing is borrowing against cash-value life insurance. You can use the value in a life insurance policy as a way to obtain cash.

Some of the benefits of this option include the fact that interest rates are usually pretty low, and if you don’t make payments or you die without repaying the debt, it’s just deducted from the amount a beneficiary receives.

Finally, you can also look at loans that are not from banks. This isn’t exactly self-financing, but there are advantages. You can go through direct peer-to-peer lending platforms as an example. These loans can be more expensive than bank loans, but also more accessible.

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About Dequiana Jackson

Dequiana Jackson, CEO of Inspired Marketing, Inc., is a small business marketing coach who teaches women entrepreneurs how to monetize their message so they can make more money from their expertise. Dequiana is the author of Know Your Business: How to Attract Ideal Clients & Sell More and runs the award-winning blog,

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