| ome-based entrepreneurs self-finance the | | | | business owners is the MicroLoan Program. This |
| founding of their businesses. Home-based business | | | | program provides loans of up to $35,000, mostly |
| owners are independent, and most dislike the | | | | to start-up or recently formed businesses. |
| notion of being beholden to a lender. However, | | | | Minimum loan amounts are much smaller, and the |
| there comes a time in the life of most successful | | | | average loan is for just $13,000. MicroLoans must |
| businesses when self-financing isn't enough. | | | | be repaid within a maximum of six years, and |
| Perhaps you have an order that you can't fulfill | | | | owners of home-based corporations will be |
| because you lack sufficient capital to purchase the | | | | required to sign a "personal guarantee," holding |
| supplies. Or maybe your sales volume is growing | | | | them personally liable should their corporation |
| so fast that you're unable to re-supply while | | | | default on the loan. Alternative Sources of |
| waiting for your accounts receivable to come due. | | | | Financing Thanks to the internet, there are new |
| Either way, if you need outside financing, there | | | | alternatives to financing through traditional banks. |
| are plenty of options. The Small Business | | | | Some reputable web sites connect individual |
| Administration The Small Business Administration | | | | lenders and borrowers without the middle man. |
| (SBA) is an agency of the federal government, | | | | Using these sites, you can post a loan listing along |
| and the leading facilitator of small business loans. | | | | with pictures and information about your business. |
| Contrary to popular belief, the SBA doesn't usually | | | | You set the maximum interest rate you will pay, |
| loan money - it simply guarantees the repayment | | | | and prospective lenders can decide whether or |
| of the loans. This gives traditional lenders (banks | | | | not they're interested in funding you. Lenders are |
| and credit unions) a greater incentive to make | | | | able to see a summarized version of your credit |
| small business loans, since if you don't pay them | | | | report, and you may also be required to submit |
| back, the SBA will. But that doesn't mean that | | | | some form of income verification. If more than |
| you're off the hook - far from it. If you fail to | | | | enough lenders are interested in funding you, then |
| repay an SBA-backed loan, the federal | | | | they bid down your interest rate and save you |
| government will be your new creditor, and that's | | | | money! Once your loan is funded, the amount is |
| not a creditor you want to have. Types of SBA | | | | deposited in your checking account, from which |
| Loans The 7A Loan is the SBA's most common | | | | your monthly loan payments is withdrawn. All |
| loan program. Funds from 7A loans can be used | | | | loans are for three years, and are fully amortized |
| for almost any business purpose, including the | | | | - no balloon payments, no surprises, no catch. If |
| establishment of a revolving line of credit or the | | | | you have a grandparent or great-uncle who would |
| purchase of inventory. Loans are typically for | | | | like to give you a loan, the internet provides great |
| amount in excess of $50,000 with a maximum | | | | alternatives for you, as well. Web sites specializing |
| guaranty of $1.5 million. The federal government | | | | in family loans help eliminate stress by drawing up |
| does not permit lenders to impose any balloon | | | | legally binding documents, and then administering |
| payments, points, or application fees on 7A | | | | the loans. This means that your monthly |
| applicants. The 504 Loan is a safer, more secure | | | | payments are withdrawn from your checking |
| loan for lenders to make. Funds from 504 loans | | | | account and deposited into your lender's. There |
| can only be used to purchase securable assets | | | | won't be awkward moments at family |
| such as property, plant, and equipment. 504 loans | | | | get-togethers - these sites do the dirty work; |
| cannot be used to consolidate debt, establish a line | | | | sending the payment reminders and collecting the |
| of credit, or even to purchase inventory. | | | | payments. Lack of access to capital is the #1 killer |
| Furthermore, at least one job must be created or | | | | of small companies, but as you can see, there are |
| maintained for every $50,000 worth of 504 loan | | | | multiple sources of financing for growing |
| funding. Most home-based business owners have | | | | home-based businesses. Don't let a lack of funds |
| no interest in building factories or buying | | | | stunt your company's growth. The money is out |
| bulldozers, so the 504 loan is probably not | | | | there if you just know where to look. |
| applicable. A great loan program for home-based | | | | |