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You are here: Entrepreneurs Business Finance Financing Your Home Based Business

Financing Your Home Based Business

Financing Your Home Based Business

There are many businesses which require large funds for establishment, whereas home-based businesses require small amount of working capital.

You need to purchase some equipments, inventory to get started your business. And in the meantime, you will incur maintenance expenses, even if you are not making money yet.

There are many sources which can provide finance for your home-based business. Before making an arrangement for funds, first plan out all the expenses and how much you can spend on your new project. As planning plays an important role in business, business plan will help you to figure out the start-up capital you will require as well as to plan for your future financial requirements.

Most people would start their business using personal savings, but the problem starts when your savings do not meet financial needs of your business. You can raise finance for your business from cash on hand or by selling valuable property or through other assets such as equity in your home. Here are few sources from where you can obtain finance for your home-based business:

One of the best ways to finance your business is by obtaining loan from government. Government offers business loans on lower interest rates than other type of private loan. You can obtain a loan for a longer period of time.

You can also apply for commercial loans, which is the most obvious choice. If you provide guarantee using your personal or business assets, then only commercial banks may grant your loan. If you are having great credit history, banks can also offer unsecured loans up to $100,000.

Another way to finance your business is equipment lease financing. Equipment leases give you access to many type of equipments such as copiers, cars, computers and many more. Though it does not bring in cash, leasing reduces the amount of cash you otherwise have to raise.

You can also apply for loan to Small Business Administration (SBA), the SBA is federal agency which helps small businesses raise capital, by guaranteeing the loans made by private banks. SBA does not loan the money directly, you have to personally guarantee SBA loans and should show sufficient cash flow to pay back the loan.

As friends and family are supportive, you can also look to your friends and family, they often will not charge any interest. So you can borrow money from them.

These are various sources from where you can borrow money to expand or to establish your home-based business. Take your own time and then select the right source of finance for your business.