If you don’t like the idea of funding a patent with credit cards, loans, or investors, there is always a trusty standby: personal savings. Funding a patent with personal savings is actually not as painful as you might think, and unlike the other options, it does not leave you entangled with any other people or institutions after the fact. When you reach into your bank account and pay for a patent with your own money, that’s it. You own it, and you’ll never hear a word about the finance-related aspect of that patent ever again.

Sounds pretty good, doesn’t it? Of course, some readers are no doubt calling upon the army of rationalizations and excuses for why this is impossible. Here are some of the most common:

1) “I barely make enough money to cover my living expenses as it is, never mind save some of it!”

2) “Saving money is pointless. Plus, it takes too long.”

3) “I can’t discipline myself to save up for something so expensive.”

If you’re serious about funding a patent with personal savings, it’s important that each of these excuses be rejected and replaced with proper thinking. Less that, the goal may never be achieved. So let’s begin with the first excuse. This is by far the most common reason people give for not saving money, both in their personal lives and for major purchases like patents. And there’s usually a grain of truth to it. Many people are, no doubt, struggling to make their current income stretch far enough. But in almost every case, there is something (often many things) a person could do to trim their expenses. How many of the people who claim saving is impossible are eating out 2-3 times a week, or buying expensive clothing, or taking vacations, or other nice, but non-essential purchases? More than you would think.

If you find yourself saying saving is impossible, put that theory to the test. Examine your finances. Is it really true that everything you currently spend money on is absolutely essential? Make a game out of it. Once you have determined the cost of getting your patent, make a list of your recurring expenses and ask yourself, “If I stopped spending money on this, and instead saved that money, how much closer would that bring me to getting the patent?” Almost every financially successful person thinks this way, and if you don’t already, now is the perfect time to start.

Another all-too-common objection is the idea that saving is pointless because it takes too long. An economist would ask (and so should you), “Too long compared to what?” What makes it too long? A provisional patent costs about $400 through LegalZoom.com. Let’s say you’ve assessed your finances and you can only afford to save $50 a week. If you really did save that money, you would have your patent in just two months. So ask yourself: Is it really true that two months (or even four or six months) is “too long” to wait to pursue your invention dreams? What’s the alternative? Unless you plan on funding your patent with credit cards, loans, or investors, the only alternative is not getting the patent at all. Kind of puts things in perspective, doesn’t it?

The third objection is the most honest, because it places the responsibility for saving on you. However, it is no more valid or true than the other two. Nine times out of 10, people who say that they can’t do something are really saying that they won’t do something. Think of people you know (or have heard of) who say they can’t stop eating, or can’t keep up an exercise routine, or can’t get better grades in school. Is there literally some cosmic force stopping them from doing those things? In most cases, no. The bare, crass fact is that those people are not yet motivated enough to follow through on their plans and find what they are doing already to be more satisfying. That’s all well and good, but the question that arises is “How bad do you want it?”

Do you look a year or two into the future and see yourself as a successful inventor? Are you prepared to do everything it takes to make sure that it happens? If the answer is yes, that should be all the motivation you need to save. If you really cannot summon the discipline to set aside a modest amount of money each week for something, chances are you really don’t want it as much as you claim to. We don’t say that to insult you or question your commitment, but at the end of the day, it really is that simple.

Luckily, as we alluded to earlier, saving money for a patent is not the excruciating chore you might think it is. If you start out with a provisional patent (as we always recommend doing), and you purchase it through LegalZoom (no headaches or lawyers!), all you will need to save is a mere $400.

PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com

Once you have decided to get a patent, the question often becomes, “How am I going to pay for it?” One attractive option is to get a loan from a bank and use it only to pay for the patent. However, this should not be approached mindlessly. Unlike credit card companies, banks are extremely conservative and often will not lend money unless you have impeccable credit or are willing to pay huge interest rates. This is especially true during the current 2008 financial crisis. So if you decide to use this type of patent financing, here are some things to keep in mind:

1) Check your credit score BEFORE applying for your loan.

It should go without saying that people with higher credit scores can borrow more money and pay less interest. That said, it’s amazing how few people actually take the step of checking their credit score before applying for a loan. This is mandatory, not optional! Even if you find out that you have a low credit score, knowing about it CAN help you. Credit reports often have mistakes and erroneous entries, that the credit bureaus are required by law to correct. One common example is that a bill you paid long ago might still be on your report as “unpaid.” If so, you can likely have this removed which in turn boosts your credit score.

2) Determine the amount of money you NEED and borrow NO MORE.

The correct approach for getting and using a loan is to identify what you need the loan for, calculate exactly how much you need, get the loan, and spend it only on what you planned. It is not, as many loan applicants seem to believe, exaggerate how much money you need and spend it on anything that catches your eye once the money is in your hands.

So, how much money do you need to pay for your patent? It depends. Start out with a provisional patent. Borrow no more than $500-$1,000, depending on whether you do it yourself or use an attorney. Therefore, you should borrow only that amount. If the bank insists on loaning you more, try to borrow as little additional money as possible or use alternative patent financing, like a credit card.

3) Devise a plan with a date for full repayment.

It is foolish to go into any type of debt without a plan for repaying it. At a bare minimum, any plan must include a date by which you expect to fully repay the debt with calculations of how and when it will be paid off. So, for example: you already had a provisional patent but now need to borrow $3,000 for a utility patent. Figure some things out before borrowing that money.

First of all: how will you pay it back? Presumably, you are borrowing the money because you don’t have it now. So how will you get the money to pay it back? With that question answered, you can move on to the question of how long it will take to pay the money back. How much can you afford to pay per month? How many months would you have to make that payment before the entire loan was paid off? Don’t forget to take interest into account; after all, no bank would lend you the money if all you had to repay was the exact amount borrowed.

Only when you have a written plan indicating exactly how and when the loan will be repaid should you accept it.

4) Get banks to compete with one another.

Loans often come down to a negotiation between you and a loan officer. Who wins in negotiations? Usually, it’s the person with the most options. And while you may not have more “options” than a bank (who can theoretically turn around and lend money to thousands of other people), you can get banks competing against each other. The best way to do this is to shop around. Get quotes from multiple banks and lenders and make each one aware that you have other offers. Websites like LendingTree.com can help you do this automatically by showing you side-by-side comparisons of how much each bank will lend you at various interest rates. You are then free to either accept one of those offers outright, or try to negotiate further with one of the banks in question.

The key is to approach funding a patent with a bank loan as a responsible consumer. If you execute all of the above four steps in order, rather than leaping at the first loan that seems appealing, you will undoubtedly have a better experience.

PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com

If you cannot patent your invention with your own savings, the use of a credit card is another option. Now, we understand that you might be weary of financing an invention this way. If you’re like most people, you’ve heard dozens of horror stories from people who allow themselves to be consumed by crushing consumer debt. The difference, however, is that most people run up credit card debt mindlessly, for impulse purchases that depreciate in value. Should you choose to use credit card debt, do so in a calculated and responsible manner. Borrow no more than you need and repay it on a set schedule with a clear date for full repayment.

That being said, let’s begin with some much-needed clarification on how credit cards work. (This will then be related back to your goal of funding a patent.) Very simply, credit card companies make the bulk of their profits on interest. For all the talk about the importance of paying back debt quickly, Visa and MasterCard want you to pay them back at a nice, leisurely pace. The reason is very simple: if everyone paid off what they charged in a nice, timely fashion, Visa and MasterCard would not make much money. Mary Hunt remarks on this in her book, Debt-Proof Living:

“Credit card companies reluctantly tolerate those of us they call “deadbeats” – cardholders who always pay their balances in full and do not participate in the payment of interest and fees.”

That’s right – in the eyes of a credit card company, you are actually scorned and discouraged from repaying what you owe in full. Someone who charges thousands of dollars and takes years to repay it, on the other hand, is a residual income stream for the credit card company. This is what most credit card holders become, charging more than they need. So they chug along, making the minimum payments each month and sending an extra 18%-22% or more in interest to the credit card company to boot. This is not an intelligent way to use debt!

What you are going to do is become one of the “deadbeats” discussed earlier. It all starts with determining exactly how much money you need and borrowing no more. In your case, the amount you need to borrow will be fee for a patent.

The first step to funding a patent with a credit card is determining the amount of money you need. Once you have that amount in mind, it’s time to find the ideal credit card to borrow it with. This can be a card you already have, or a new one that meets the criteria we’re about to give you (if your current card does not). Basically, the ideal credit card to finance a patent with has the following characteristics:

1) No annual fee

2) A credit limit at or above the cost of the provisional patent (preferably not much higher)

3) A grace period during which you can repay without interest (this will usually be anywhere from 1-2 months from the time of the charge)

*If your current credit card has a balance, look for a card that offers 0% APR on balance transfers.

The grace period requirement is particularly important. While paying off the cost of your patent over time isn’t the end of the world, it’s far more desirable to pay it off sooner than later. Credit cards that offer a grace period are ideal for this, as a disciplined borrower could theoretically repay in full during that time without incurring any interest or fees. This should be what you are shooting for. To make it easier on yourself, draw up a payment schedule. Examine your finances and determine how much you can pay back each month. Then draw up a schedule incorporating the monthly payments you can afford to make, and project when you will have it paid off.

Let’s say expenses are tight and you can only afford to pay $75/month toward your debt. That’s fine. The important thing is that you actually do pay it. To help yourself you may want to consider setting aside the amount of one monthly payment to ensure that you stay on track. Again, the more you can pay per month, the sooner you will be out of debt.

From that point, it’s just a matter of holding yourself to the schedule you made. If you make your payments as planned, you will have successfully financed your patent without going into the crushing debt most borrowers do. Good luck!

PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com

Not everyone is suited or willing to fund a patent with credit cards or bank loans. Some of the possible reasons for either scenario are:

1) An insufficiently high credit score.

2) Carrying too much existing debt.

3) Banks typically will not lend less than $1,000. (i.e.: the amount for a provisional patent)

4) The payments cannot be afforded.

5) Other

For what it’s worth, we strongly suggest correcting whatever is keeping your credit score down, and/or repaying existing debt before financing a patent. However, for those who simply cannot or will not wait, there is another way: funding a patent with an investor. Rather than committing yourself to a strict repayment plan, with a bank or credit card with payments due immediately, using an investor can buy you more time and flexibility.

For example, let’s say you plan to turn the product you are patenting into a business. You want to mass-produce the invention in order to sell or license it. Great! The only problem is that the process takes time.

Using an investor gives you more flexibility. Rather than demanding immediate repayment, the investor will understand that commercializing the patent is a gradual process. The deal can be structured in such a way, that the investor provides the initial capital for the patent and recoups his money if and when you license it. Of course, the investor will not be doing this out of the goodness of his heart; he will expect a cut of your future profits. Furthermore, you shouldn’t take just anyone’s money. You need to be careful about whom you allow to invest in your patent. Here are some guidelines:

1) Borrow a little from someone who has a lot.

In his book, Succeeding, John T. Reed advises businesspeople to ‘borrow a little from someone who has a lot.” This applies to funding a patent with an investor as well. Think about it: if you need to borrow $3,000, and you borrow it from your Aunt Susan who only has $5,000 to her name, she is going to hassle you non-stop until she is repaid in full. She will not be able to “think long-term” and wait however long it takes for your patent to make money. And if it never makes money, you could be in for serious trouble. Don’t put yourself in a situation where a mistake could bankrupt someone. Rather, try to only take investment money from someone who has way more money than you need him/ her to invest. The less money respectively that they lend you; the less they will bother you.

2) Make it crystal clear what the investor’s recourse is.

Letting someone invest money in your patent is a business deal. Business deals are inherently risky. For this reason, you and your investor need to be on the same page about what the investor’s recourse is, should the patent fail to make money. Some investors will want to know that you’ll repay them if that happens. Others will happily shoulder the risk and eat the loss. Either way, you need to establish this before any money changes hands. Do not take money from anyone until you know what they expect of you if the worst-case scenario happens. Obviously, from your standpoint, the ideal investor is one who is okay with having no recourse; one who will eat the loss if your patent is a bust.

3) Don’t be too quick to sign away future profits.

Some inventors are so desperate to get the capital they need, that they will sign over rights to future profits to people willing to invest. Don’t go overboard with this. If you need $500 for a provisional patent, it’s probably smarter to use a credit card or even a payday loan than to give someone 50% of your future profits. Who knows? Maybe your patent won’t go anywhere and the investor will have invested that money for 50% of nothing. But you have to consider the flipside- What if it becomes a huge hit? Then the investor sits back and collects 50% of a lot for a measly $500. Therefore, you should try to sign away as low of a percentage of future profits as possible.

4) Only use an investor if you cannot use debt financing.

The great advantage of debt financing (using a bank loan or credit card) is that once you repay the debt and the interest, that’s it. The bank or credit card isn’t going to claim any future profits whatsoever. For this reason, you should generally only use an investor if you cannot fund the patent using debt. It’s more straightforward, less of a hassle, and if you have the discipline to repay what you borrow, is far more advantageous than bringing in a silent partner.

(Perhaps the only time it would be better to use an investor is when the investor contributes something other than money; say, if he/she is a well-connected insider in the industry your patent pertains to. In this case, it may be more advantageous to work with them than use debt financing.)

Keep these four tips in mind and you will eliminate many of the hassles and risks of working with investors. Good luck!