Home Based Business--Bank Loans To Grow
Home Based Business--Bank Loans To Grow
If you've read other articles we've written you know that most successful businesses are started with the founder's own money, and maybe with help from friends or family--perhaps even angel investors. But if you have some success behind you, a bank loan may be a possibility.
Why and How Banks Lend Money
In effect, bankers are a little like Robin Hood except that banks take from the cash rich and give, er . . . make that lend, to the cash poor. In other words, banks rent money to you at a price (interest) rate that’s high enough to cover what they pay to borrow it from depositors, plus they're fixed expenses and some profit.
What a bank can offer you is regulated to protect their depositor's money (maybe your money) that they're lending. The bank’s size, its own asset/liability mix, and their management preferences all influence what the bank will do. As a result, banks vary widely in their product offerings and risk appetite. So, to cut to the chase, it’s not at all unusual for one bank to approve a loan that others have declined.
Commercial Loans
Business loans from banks range can be from a few thousand dollars up to a maximum based on the size of the bank and their risk appetite. Smaller banks are more limited than big ones, but they can often make a larger loans by sharing it with other banks.
Most small-business loans are secured with liens on you company and personal assets. You may not have to pledge your first born, but lenders will require personal guarantees (you spouse will sign too) especially if your business doesn’t have a strong credit history, reliable cash flow, or offer enough collateral. Your home is often taken as additional collateral on such loans, so don’t feel like you’re being singled out if they want you to to literally pledge everything you own. Think of it from the bank's perspective: if you're not willing to risk everything, why should they risk anything?
How long will it take to get the money you need? Expect the process to take at least several weeks . For loans over $100,000 four to eight weeks isn't unusual. And do spend it before you get it; once the loan is approved it may take several days or even weeks to actually receive your money.
Personal Loans
You might be able to find money for your home based business with a home equity loan, second mortgage, first mortgage refinancing, and personal loan. These are different than commercial or business loans because they're handled by the consumer lending side of the bank rather than the commercial lenders. If your credit and income history is good consumer loans are easier to obtain than commercial loans, they’re governed by consumer protection regulations, and they have fewer strings attached.
Keep in mind that many lenders won't let you use a personal loan for a business, but others don't mind. So shop around before you try the old "I just want the money for a vacation and to fix up some stuff around the house" trick—it's fraud, and although a lot of people use that scheme, you may loose more than your loan if they find out.
Consumer loans don’t require a business plan, company financial information, or most of the other documentation that business loans require; and they're usually less than four pages including a personal financial statement. Approval can occur in days and even hours if you credit score is good. In addition, consumer lenders may or may not require collateral depending on your credit and income history.
Thanks to consumer protection laws, as long as you make your payments--even if your business is hurting--you probably won’t run the risk of having the bank pull the loan. That can and does happen with business loans, and they'll want the rest of their money pronto.
So banks can help if you can show that you and your business are a good risk, especially if you have a a long history with the bank and money on deposit.
Why not use the money you have in savings? Use your credit when you can, your cash is always good.
Home Based BusinessBank Loans To Grow - To learn more about this author, visit Kate Lister's Website.
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When a newspaper reporter asked bank robber Willie Sutton why he robbed banks he answered, “Because that’s where the money is.” And Willie was right if you're trying to grow a business too--banks do supply the bulk of the money for small businesses.
If you've read other articles we've written you know that most successful businesses are started with the founder's own money, and maybe with help from friends or family--perhaps even angel investors. But if you have some success behind you, a bank loan may be a possibility.
Why and How Banks Lend Money
In effect, bankers are a little like Robin Hood except that banks take from the cash rich and give, er . . . make that lend, to the cash poor. In other words, banks rent money to you at a price (interest) rate that’s high enough to cover what they pay to borrow it from depositors, plus they're fixed expenses and some profit.
What a bank can offer you is regulated to protect their depositor's money (maybe your money) that they're lending. The bank’s size, its own asset/liability mix, and their management preferences all influence what the bank will do. As a result, banks vary widely in their product offerings and risk appetite. So, to cut to the chase, it’s not at all unusual for one bank to approve a loan that others have declined.
Commercial Loans
Business loans from banks range can be from a few thousand dollars up to a maximum based on the size of the bank and their risk appetite. Smaller banks are more limited than big ones, but they can often make a larger loans by sharing it with other banks.
Most small-business loans are secured with liens on you company and personal assets. You may not have to pledge your first born, but lenders will require personal guarantees (you spouse will sign too) especially if your business doesn’t have a strong credit history, reliable cash flow, or offer enough collateral. Your home is often taken as additional collateral on such loans, so don’t feel like you’re being singled out if they want you to to literally pledge everything you own. Think of it from the bank's perspective: if you're not willing to risk everything, why should they risk anything?
How long will it take to get the money you need? Expect the process to take at least several weeks . For loans over $100,000 four to eight weeks isn't unusual. And do spend it before you get it; once the loan is approved it may take several days or even weeks to actually receive your money.
Personal Loans
You might be able to find money for your home based business with a home equity loan, second mortgage, first mortgage refinancing, and personal loan. These are different than commercial or business loans because they're handled by the consumer lending side of the bank rather than the commercial lenders. If your credit and income history is good consumer loans are easier to obtain than commercial loans, they’re governed by consumer protection regulations, and they have fewer strings attached.
Keep in mind that many lenders won't let you use a personal loan for a business, but others don't mind. So shop around before you try the old "I just want the money for a vacation and to fix up some stuff around the house" trick—it's fraud, and although a lot of people use that scheme, you may loose more than your loan if they find out.
Consumer loans don’t require a business plan, company financial information, or most of the other documentation that business loans require; and they're usually less than four pages including a personal financial statement. Approval can occur in days and even hours if you credit score is good. In addition, consumer lenders may or may not require collateral depending on your credit and income history.
Thanks to consumer protection laws, as long as you make your payments--even if your business is hurting--you probably won’t run the risk of having the bank pull the loan. That can and does happen with business loans, and they'll want the rest of their money pronto.
So banks can help if you can show that you and your business are a good risk, especially if you have a a long history with the bank and money on deposit.
Why not use the money you have in savings? Use your credit when you can, your cash is always good.
Home Based BusinessBank Loans To Grow - To learn more about this author, visit Kate Lister's Website.
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Staging DivaDebra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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