Financing Your Home-Based Business

Once you complete your plan, you will have a better idea of the type of funding you will need. Below is a list of the most popular sources of funding.

Commercial banks. Commercial

loans are attractive because they do not require entrepreneurs to turn over equity or company control. But paying off debt can be difficult if you are not making a profit. You may not have access to bank loans if you have no relevant experience or collateral. If you are looking for $100,000 or less, you can often get an unsecured loan based on your personal credit history. You can also obtain a secured loan against any personal assets you might have.

Small Business Administration. The SBA loans no money directly. Instead, it guarantees 75 percent of individual loans made by private lenders, up to $750,000. But a business must first show that it cannot obtain conventional financing at reasonable terms. Business owners must personally guarantee SBA loans and must also show cash flows sufficient to repay the loan. Most commercial banks offer information about SBA loans.