Ways to Finance Your Home-Based Business – Are you a businessman or businesswoman who is looking for money to finance your home-based business? Well, there are several ways you can get finances to fund your businesses. If you don’t know about the available ways, through this article, we are going to enlighten you on almost all the easy ways you can get funds for your home-based business. So stay with us and read through this article to the end for full details on this article.
About Home-based Business
Home-based businesses are businesses that are carried out from the home offices. They are businesses with very small employees, in fact, most times, it is a sole proprietorship kind of businesses. Some of the characteristics of the business are these:
- They are small in nature
- They don’t always have a frontage or packing space
- Cheap to operate
Ways to Finance Your Home-Based Business
Let us consider some of the ways you can get a loan to finance your home-based business:
- Bank loans
- Small business administration loan (SBAL)
- Government small business grants
- Corporate programs
- A loan from friends and Family
- Private partnership
- Crowdfunding
- LendingClub
- Community development finance institutions
- Convertible debt
Business financing? Yes, both the big and the small business enterprises at a point in time need actresses to capital to finance their businesses. There are many ways you can fund your small business, they are as follows:
Small business administration loan (SBAL)
If you are able to meet the criteria, a small business administration loan is always almost the first place most people think of whenever they want to collect loans to support their small businesses. Sometimes applicants’ applications can be rejected for one reason or another. Most times, it has to do with what you need to do or have to qualify for the loan.
Bank loans
Requesting for loans from banks is another reliable means of getting loans that will help you to boost your small home-based business. The problem that small businesses will have before they can get loans from banks is their inability to provide the banks with collateral. In truth, the process of acquiring bank loans this day has become very strict.
Government small business grants
Small businesses can also get grants from the government to finance their small businesses. But before you apply for this grant, you have to know the type of business that the grant is for. For you to get more information about the government grants, it will make more sense if you carry out research at the SBA website where you can get the necessary information you need for the grant,
Small business grants are available to entrepreneurs with peculiar challenges:
Women’s Business Centres give loans to women, who are economically or socially disadvantaged
- Minorities-owned businesses receive loans from SBA
- The 8(a) Business Development program is for those from economically disadvantaged areas
- Veterans Outreach Business Centers loans are also for veterans
Corporate programs
There are corporations that organize corporate business financing programs for some small businesses that may not be able to meet the requirements and qualifications of traditional credit sources. Goldman Sachs is a good example of a corporate program firm that provides affordable loans to small businesses at a very low-interest rate.
Private partnership
As a way of boosting your business, you can decide to partner with a private firm that will help you to have access to products and markets. This can help you face competitors in your line of business. But there are certain factors you have to consider while you think of a private partnership:
- Find out if the brands share the same values
- Do the brand’s product offerings complement one another?
- What will be the mutual benefits for both partners from the relationship
- Are the customer profiles the same or similar to your business?
A loan from friends and Family
Some small businesses for the sake of inability to pay much interest as in the case of a lending institution. When getting money from friends and family, it is important to make the terms very clear. That is if you are to pay the money back after the business must have stood well or the money is just a dash because sometimes, businesses can face hard times.
Read Also:
Ways to Send Money to Nigeria from the US (2023 Update)
How to Borrow Money From Airtel in Nigeria (2023 Update)
Crowdfunding
This is a way of supporting a small business venture whereby you ask a large number of persons in a particular dedicated crowdfunding website to help you with some financial assistance to fund your business. In crowdfunding, it is mostly people who believe and trust in your creative ideas or potential that will be willing to help you to increase your business.
You can consider the following options:
- Kickstarter: The most popular choice for crowdfunding is Kickstarter
- Indiegogo: An alternative to Kickstarter.
- AngelList: Matches you with angel investors.
- Kiva: It can offer loans without interest
- Accion Microfinance Bank: this is another option that you can employ
Community development finance institutions
A lot of nonprofit community development finance institutions, also provide financial support to small home-based businesses. They are everywhere in the country. Some of them are ready to give your business support at a very low and sometimes no interest rate depending on the person involved.
LendingClub
If you have been in business for a few years and still want additional capital, to increase your business, you can go to LendingClub. With LendingClub, loans are financed through investors. Here are the conditions you have to meet before your loan request will be met:
- You need two years of business history,
- At least $75,000 in annual sales,
- A good personal credit score.
NOTE: A lending club will give you a gap of five-year to pay back your loan, in addition to that, you have to pay the interest rates and additional fees for the loan.
Convertible debt
Convertible debt is the process of funding a startup business whereby the business that borrows money from an investor is expected to convert the debt to equity in the coming future. This is usually based on the agreement of both parties.
In this case, it is advisable for you to find out if you will be able to allow an investor to have certain control over your business. It is a good way of helping your business to grow but one big challenge with the financing method is that it could be very hard for you to let someone else, not your brother or relatives take ownership and control of your business for some time.
Conclusion
Thank you for reading the ten ways you can finance your home-based business. We hope that the information was helpful to you and that you will use it to boost your startup businesses.
