Securing a Loan for a Home Business
Securing a loan for a home business is
possible, although it may be a little harder than obtaining a loan for
a traditional business. On the good side, women's home businesses are flourishing
today, as many people are choosing to telecommute from home, and are operating
legitimate businesses from their homes. Many mothers have been running
businesses from home for many years.
Securing the loan requires much of the
same work for a home business as any business.
It is necessary to put down on paper a business plan, and a cash flow statement.
When approaching a lender such as a traditional banking firm or loan broker,
having concrete facts and projections is very helpful in making the case
for getting that loan.
It may be necessary for women to obtain
a collateral based loan, meaning something
tangible is put up as security, such as a house or vehicle. To obtain an
unsecured, or signature loan, requires excellent credit history and credit
score, and a long relationship with the lending office is also helpful.
There are several ways to
go about securing a loan for a home business:
1. Traditional bank lending
2. Loan specialty agencies
3. Payday or fast cash advance stores
or websites
4. Friends and family
5. Non traditional ways: pawn shops
The method chosen depends on the amount
of money that is needed. For small amounts, under $500, it may be possible
to raise the needed money from pawning or selling items, borrowing from
friends and family, or taking out a short term loan such as a payday loan.
For larger amounts, there are loan vendors and banks or credit unions.
For very large amounts, there are some government programs such as those
found in the SBA (Small Business Administration) that are specifically
designed for small businesses. The biggest obstacle to overcome is that
a business in a home may not be viewed as a "real business".
There are many types of
home businesses that might require a loan, including:
1. Cleaning businesses
2. Bookkeeping or Accounting
3. Typing, writing, public relations,
media or advertising
4. Parts business or jobber supplier
5. Drafting or engineering consulting
6. General consulting, many areas of expertise
To compose a business
plan, basics include who, what, when, where, and how, and financial
information. Be sure to include details on how to market, finance, and
manage the proposed business. The SBA has detailed information on writing
a business plan, and important articles regarding starting and running
a small business. (www.sba.gov/smallbusinessplanner/index.html)
For the lender,
assemble all related financial information. Estimate two years out, including
requirements for operation, equipment, payroll, housing, vehicles, vendors,
manufacturing, marketing, and sales. Financials include previous tax returns,
assets and liabilities, and basically everything possible about personal
financials. Include the amount of money needed to borrow, and any other
sources of financial support as well as personal and business obligations
and other vested interests. Securing a loan for a home business is a professional
matter and should be approached in that manner.
Copyright © Rebecca Hubbard All Rights
Reserved |
