There are several ways to finance your new home business such as getting a loan from your local bank, taking out a loan from your 401k or retirement savings or applying for a microloan from the Small Business Association.
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Financing a Home Business With a Microloan

When you are financing a home business, there are a few options to consider and the Small Business Association is one place that should not be overlooked. There are several ways to finance your new home business such as getting a loan from your local bank, taking out a loan from your 401k or retirement savings or applying for a microloan from the SBA.

The Small Business Association, which is sometimes referred to as the SBA, is an excellent source for small business advice and resources, providing an array of information for entrepreneurship. The SBA makes resources available to community lenders or intermediaries that make these types of loans to borrowers for small business start ups and newly established businesses.

One of the most popular programs is the microloan program. The maximum amount is $35,000, although, most of the loans are quite a bit less than that with the average being around $13,000. Everything is done locally and without discrimination, so it could be an excellent option when financing a home business.

Documents that you will need:

Business and personal financial statements will be necessary to apply for a microloan for financing a home business. All owners and partners that own at least 20% of the business are required to provide the last three years of personal financial documents, as well as current statements. Also, you will need copies of your tax returns and current business statements, if you have them. Include

A business profile will be needed to describe what type of business it is, length of time that the business has been operating, number of employees that you have and the figures of your annual sales. Create your own business profile as accurately as possible; it will be one of the most important things to provide, along with the financial records.

Lastly, you will need to describe your loan request. Type up a document that tells exactly what your business will be using the funds for and the loan amount that you are requesting. Be as detailed as possible; do not just say that it will be used for financing a home business. You may be asked if you have any collateral to secure financing, like any business equity or available cash.

Once you have all of your necessary documents in order and your business plan is complete, it will be time for you to call the bank to start your application. You might want an expert to glance over your business plans and documents for accuracy. There is an additional resource that the Small Business Association has available for business advice. It is called SCORE and it is an acronym that stands for Service Corps of Retired Executives.

These are professional business people that have been in your shoes and know how to advise small businesses for success. There is also another place where you can get counseling on a one-on-one basis and it is called the SBDC, which stands for Small Business Development Centers. You can find the information for both of these through the SBA website or by asking your local chapter.

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