*Funding for a Side Hustle
Updated: Jun 2, 2020
So, what is a side-hustle?
You may not realize it but more than likely you’ve already worked a side-hustle of your own when you were a teenager. A side-hustle is a hobby or interest you engage in during your spare-time to earn extra income. Whatever odd jobs you did on the weekend for cash other than actual employment was probably a side-hustle. I’ll bet you can name more than a few: Mowed Lawns. . . Babysitting. . . Garage Cleanout. . . House Cleaning. . . Painting Projects. . . Dog Walking/Sitting. . . Moved Furniture. . . Car Wash. . . Shoveled Snow. . . etc. As you can see, most of these weekend odd jobs are typical among teenagers. However, as we mature our interests change, our skills improve and if we’re true entrepreneurs at heart, we’re still side-hustling on the weekends but we’ve refined our pursuit to tasks closer to what we’re passionate about. More advanced side-hustles may include a wide variety of tasks from Repurposing Furniture for staging, Leather Works/Tanner, Backyard Self-Defense on YouTube, and Crochet Lessons, Bee Keeper, Freelance Writer, Cake Decorator, Backyard Welder, Teacher/Homeschool Co-Op Coordinator, Puzzle-Room Designer, Small Engine Mechanic, Virtual Assistant Manager, Photographer… etc. With a little imagination there’s no end to the possibilities.
When does a Side-Hustle or Hobby Become a Business? As an entrepreneur, when you’re not working your regular 9-5, you’re always brainstorming how you can improve your skills and capitalize on your side-hustle. Since side-hustles are considered hobbies for tax purposes you’re not required to be licensed or even register with your Secretary of State, as long as you earn less than $400. Any amount over that must be claimed as income on your tax return form 1040, Line 21 and subject to self-employment tax. You can only deduct hobby expenses up to the amount of your income from the hobby. So, if you earn $400 you can’t claim more than $400 in expenses in a year.
Keep Your Job If you have a job that is meeting your living expenses and funding your side-hustle, don’t be in such a hurry to quit your job. Spend some time getting your side-hustle or startup off the ground with your 9-5 job paying your bills. This lets you build your business with fewer setbacks, and lets you stay true to your goals without needing to give in to financial pressure.
Funding for a Side-Hustle?
Bootstrapping Basically, bootstrapping is when you use your own funds to run your side-hustle. This money may come from a variety of funding options:
· personal savings
· low or no interest personal credit cards
· HELOC – home equity line of credit
· Borrowing against or cashing out a 401K
Crowdfunding Crowdfunding is the use of small monetary donations from a large group people to finance a new business venture. With a specific idea in mind and a projected timeline, you propose your idea to your crowd who then endorses your idea with monetary contributions. Crowdfunding is a relatively easy short-term method for raising side-hustle funds as the crowd you solicit is initially made up of family, friends, co-workers or acquaintances. Tapping into various social circles quickly expands your online reach to access investors beyond the traditional circle. Barter Services Trade work for work. Join a bartering group online or through your local community business support- groups. This is a cost-effective way to keep expenses down and rub elbows with other like-minded entrepreneurs and seasoned business owners to get advice on the fly.
Small Business Grants Speak to your local SBA chapter, or Chamber of Commerce, to see if there’s local grant money that you may be able to apply for. The SBA as well as other organizations sometimes offer grants to small businesses that are run by women, minorities, or veterans. Some grants have conditions so be careful to make sure you won’t need to pay the money back. It’s good to know the terms before you accept the funds.
Small Business Loans
Qualifying for any type of bank funding is harder today than it’s ever been. With the majority of their lending at $500K + they are no longer spending time and effort on small business loans. Most small businesses and entrepreneurs are turning to alternative lending to fund their startup or working capital needs. Qualifying is easier with Brick-N-Mortar Funding requiring minimal document resulting in much faster funding, with same/next-day funding in some cases.
Credit Cards Personal credit cards are a great funding option for your side hustle when you understand how they function. Although most credit cards carry high interest rates you can avoid paying interest charges when you know how to manage them. Besides the convenience, they also provide perks, such as: earned rewards, cashback, and build your credit. Brick-N-Mortar Funding has access to direct lenders that offer personal credit cards to entrepreneurs looking for working capital. Also, to credit challenged Side-Hustlers.
Alternative Lenders Favor Entrepreneurs This is an especially good option for people with a bad credit score or track record. Our alternative direct lenders are more likely to approve loans to high-risk entrepreneurs and startups than banks. With just a few documents, the average startup entrepreneur or business owner may qualify for unsecured financing that funds in 3-7 days. With just a simple 1-page application and 3 bank statements we can get you preapproved for funding to get you hustling on the side.