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Funding Your At Home Business

If you are building your at home based business with a target to earn extra money which you eventually want to do full-time, you probably looking to accumulate enough cash to manage your company without having to use any borrowed funds. But if you’re ready to operate your company on a full-time basis, you may need some financing to better position yourself  for success!

Before lenders will grant a home based small business loan, they need to ensure that the loan will be repaid. Every loan is a risk, but lenders want to minimize as much as that risk as imaginable. They may do business with a work from home company that shows promise, but they tend to award loans to top home based business proprietors who have firm personal and business financials.

When deciding whether or not to issue you a loan, loan officers will review your gross annual sales or revenues, banking account balances, profitability, and the length of time your top home business has been around. If your organization is relatively new, the bank might ask to see your business plan.

So if your organization is indeed new, make sure to add a business plan as part of your loan application. It should include monthly cash flow projections for the first 24 months (three years for brand new companies). Longer term operations must show a schedule of up-to-date debts and loan balances, payment schedules, maturity, and available collateral.

A lender will evaluate your individual credit report and FICO score, especially if your work from home company does not have a history of producing income. Inside the personal credit info that might be reflected upon are:

  • personal credit card balances
  • individual loans
  • disposable assets
  • real estate holdings
  • tax returns
  • individual financial statements

Lenders will review your individual spending history, including how you administer plastic and process installment debt. Lenders are suspicious of people with substantial personal debt, as they are less in all likelihood to be able to handle a reduction of income during an economic downturn

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