You’ve got the idea. You’ve completed the business plan. You’re one step away from your dream of working out of your home. The only thing left to do is find financing for your home business. In a time when securing a loan is difficult, it’s best to be armed with the most information possible…and from a source you can trust.
Like in any area, home business financing if rife with people who have more interest in their own bottom line than in yours. How do you find objective information you can trust? One first step is to check out the resources at www.business.gov. Business.gov is managed by the Small Business Administration, along with 21 other federal agencies. It’s a partnership, dubbed Business Gateway, that “provides a single access point to government services and information” to help businesses.
As Business.gov notes, Apple Computer, Hershey Chocolate, Mary Kay Cosmetics and Ford Motor Company all started out as home-based businesses. And at one point or another, they all needed financing or financing information. In addition, the site also “provides resources that will help you learn more about working out of your house, starting a home-based business, and managing your business within the law.”
Something you may not know is that the federal, state and local governments often provide access to a variety of financing programs to help small businesses, especially those that cannot qualify for traditional small business loans, such as home businesses. Business.gov has a loan and grants search tool to match financing programs with your business.
The government, whether it is federal or state, does not make the financing agreements directly with business owners. What they do is provide a guarantee to banks and lenders for money they lend to small businesses. This reduces the banks’ risk, and that allows financial institutions to make such loans with a degree of confidence.
Business.gov suggests starting with local institutions and local nonprofits.
As with anything, you have to be careful of scams and disreputable lenders. This is especially the case in this tough financial market, when loans of any kind are more and more difficult to obtain. Desperation creates a fertile ground for unscrupulous lenders and scam artists.
Here are some things to be wary of: If a company demands any kind of “membership fee,” this is a red light that this lender should be avoided.
Even if you’ve gotten rejected time and time again, avoid the temptation to get a loan for an interest rate that is significantly higher than the going rate. On the other hand, you should also be wary of is someone offering a lot of money for a ridiculously attractive rate. Chances are they’re after something other than lending you money. Never get a loan from anyone who requires even the smallest “investment” in another company. There are too many legitimate lenders out there to fall in with a bad lot. While all loans do require certain fees be paid, be wary of any lender that requires large fees, in the range of thousands. According to www.allbusiness.com, these phony brokers promise low rates and instant approvals when what they really want is your bank information and social security number for an identity-theft scam.
Always listen to your gut instincts, and if you cannot do that, give the Better Business Bureau a call.
