Home based businesses have been on the rise and many people have embraced them as a profitable and convenient way of making a living. But financing such enterprises can be a little challenging, especially when one doesn’t know how to go about it. The good news, however, is that lending to home businesses has increased rapidly and many home based businesses owners have been able to secure advance loans for their businesses.
There are many home based business lenders out there who are willing to finance small businesses, and home based business owners who wouldn’t for one reason or another qualify to obtain loan from traditional financial institutions.
Kabbage Inc. is one of the leading home based business lenders and they also give cash advance loans to business owners selling products online. In their report released earlier in 2013, Kabbage Inc. said they paid more than $200 million in annualized cash to over 100,000 small business owners. This was an increase from the estimated $15 million cash paid in the previous year. Kabbage mainly lends to home office businesses such as those that sell merchandise on online stores like eBay, Amazon among others.
Accion is another leading home based business lender. This is a microfinance organization specialized in lending small business, from $500 and up to $50,000. They also offer credit and business advice to small business owners who may not be able to obtain traditional financing.
Accion however doesn’t give credit to businesses dealing with real estate, money lending, multi-level or network marketing programs, weapon sales, illegal or polluting and other related activities.
One of the best resources with up-to date information about home based lenders is Small Business Administration – a government website with the detailed information about running small and home based businesses.
Before you approach your potential lender for financing, there are a number of things you’d need to consider. Among other things you should have a long term plan on how you intend to run and succeed in your business, your form of collateral and so on. Make sure you also have a good credit report.
Convincing Your Potential Lender
One of the things your potential lender would want to know before financing you is whether your business can endure through the tough competition in the market. You should therefore know your business well in terms of strengths, weaknesses, risks and opportunities and be ready to convince your lender how you intend to deal with any challenges.
A Business Plan – having an impressive business plan enables the financier to weigh whether you have a good scope of marketing study and your business projections. In your plan you should make sure all these are well spelt out as there’s no lender who’d risk approving financing without first reviewing your plan.
Family, Friends and Partnership
If for any reason you are not able to obtain credit from banks or micro finance organizations, you can alternatively ask your family or friends to finance your business. Further you can also seek potential business partners who may wish to invest in your business. If they look at your business plan and are willing to commit themselves then you can consider your financing need as resolved.