 Featured
Small Business Article: " 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
to start a business!
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 or Micro
Loans
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.
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Rebecca Hubbard All Rights Reserved
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