SBA Loans for Home-based Businesses

The Small Business Administration, or SBA, helps individuals who are interested in developing or running their own small business. Most people are under the impression that you can obtain an SBA loan to help fund your endeavor, but the SBA actually acts as a guarantor for the loan you obtain through a bank or investment firm.

Types of SBA Loans

There are several types of loans available to small businesses. These include:

  • Basic 7(a) Loan Program. Most U.S. banks participate in this program and provide funding for SBA loans. This type of loan is the most common type of loan offered with the SBA. Most businesses are eligible, but investment business, gambling, non-profit, and real estate firms are specifically excluded.

  • CDC/504 Program. This loan program is for community development and revitalization.

  • Micro-Loans. These loans are strictly for the purpose of small businesses who need start up capital or other needs. The loan's maximum value can be $35,000, but according to the SBA, the average loan size is $13,000.

  • Disaster Recovery Loans. These loans are available even for individuals, particularly those whose homes have been damaged or destroyed by a disaster and do not have the ability to obtain loans elsewhere.

  • Special Purpose Loans. These loans cover specific areas like international trade, export businesses, and employee trusts.

Loans for Home Based Business

If you own or plan to run a home based business and need business loan startup capital, the SBA can help you. The two programs with which you are most likely to find success are the 7(a) loan guaranty program and the micro loan program. These programs allow most businesses, including home based businesses, to be eligible. The only exclusions would be those who are involved in pyramid style or multi level marketing businesses, as those types of businesses do not qualify for assistance.

If, however, you work as an accountant or care provider or freelance writer out of your home, you may be eligible for a new business loan or commercial loan to help launch your business or take it to the next level.

How to Obtain SBA Funding

The SBA underwrites the loans offered by your local funding institutions and has regional offices in nearly every state to assist you with the application, eligibility, and funding process. If you are interested in applying for a small business loan, your best bet would be to contact your local SBA office or visit the SBA website to determine the right path for your business.

Having a home based business can be extraordinarily rewarding. Not only does it offer more flexibility with your schedule and a better work life balance, but it provides you with the opportunity to have a career about which you can be passionate. The SBA can help you make your home base business dreams come true with micro loans and other funding that can ensure you have the equipment you need to build your business.