business funding Archives

How to Get a Home Based Business Loan: 5 Options

September 29, 2026April 17, 2024 by Maria Khatiashvili

Home based business loans guide with a laptop, construction plans and hard hat in a home office.

Funding for a Home-Based Business

Getting the funding you need for a home-based business can be challenging. Home based business loans can help eligible businesses cover equipment, inventory, payroll and other operating costs without a separate commercial office. Approval depends on the business, the financing product and the provider’s requirements.

Starting a home-based business means sorting out licenses, taxes and day-to-day operations. Finding business capital to start, grow or expand is another step. If you are wondering how to get a loan for a home-based business, understanding what funders look for is a useful place to start.

Many small companies start at home. It is where owners build their customer base and lay the foundation for the business. Money can be tight during those early years.

Aside from getting clients, one of the biggest challenges for business owners is finding financing. Some funders apply stricter requirements to home-based businesses, especially when operating history or collateral is limited. There are still several financing options to consider.

Home-based business funding can take several forms, from equipment financing to a revolving line of credit.

This guide covers five funding options, why approval can be harder and what to prepare before you apply.

Explore funding for your home-based business with Excel Capital: Apply Now

Home-Based Businesses After COVID: A More Common Way to Work

Home-based businesses were common long before the pandemic. The SBA Office of Advocacy’s 2020 Small Business FAQ reports that about 50% of all U.S. businesses were home-based including businesses without employees. That figure comes from older survey data, so it describes the pre-pandemic picture.

Since COVID-19, working from home has become a regular part of business life. Consultants, online sellers and service businesses can manage clients, payments and teams from a home office. For many owners, there is little reason to take on a separate office lease.

U.S. Census Bureau data on working from home illustrate the broader change: 13.8% of U.S. workers usually worked from home in 2023, compared with 5.7% in 2019. These are workforce figures, rather than a count of businesses or loans, but they help explain why working from home feels much more familiar today.

Working from home can cut rent, commuting and office costs, leaving more money for equipment, marketing and staff. Even with lower overhead, you may still need working capital when bills come due before customers pay.

Why Many Businesses Operate From Home, Especially Contractors

Construction is a good example. A general contractor, roofer, electrician or remodeler may handle estimates, scheduling and bookkeeping from a home office while crews work at customer job sites. Paying for a separate office may add little value when customers rarely visit it.

A contractor can run the office from home while owning tools and equipment, using a storage yard, employing a crew and working on signed projects. The address alone tells a funder very little about the size or stability of that business. Our guide to construction business loans explains financing needs such as materials, payroll and equipment while waiting for project payments.

The same logic applies to mobile service providers, online retailers, bookkeepers and creative agencies: the work may take place at clients’ properties, online or across a remote team. A funder needs to understand how that business operates and earns revenue.

Still deciding what to launch? Explore our home-based business ideas for options that fit your skills and experience.

Why Can It Be Harder for a Home-Based Business to Get Funding?

Perceived flight risk and business continuity

A funder wants to know that your business will still be operating when payments come due. Without a commercial lease, storefront or fixed business location, some funders may worry that it would be easier to shut down, move or become difficult to contact. This perceived “flight risk” can make them more cautious about an application.

A commercial lease is only one sign of commitment. Years in business, repeat customers, signed contracts, consistent deposits and an address the funder can verify can also show that you have an established business. Closing or moving a business does not, by itself, cancel its debts, contracts or applicable personal guarantees.

Fewer fixtures and other assets available as collateral

Some home-based businesses have few or no business-owned fixtures compared with a shop, restaurant or commercial workshop. Fixtures are goods that attach to real property so closely that applicable law treats them as part of that property. A laptop, portable tool or movable desk is generally equipment or furniture, rather than a fixture.

Fixtures can be part of the collateral securing business financing. Depending on the security agreement and applicable law, other collateral may include equipment, inventory and accounts receivable. A UCC filing gives public notice of a claimed security interest; filing alone does not create collateral or make low-value assets more valuable. If there are few assets a funder could recover after a default, qualifying for financing that relies on collateral may be harder.

The UCC’s rules for security interests in fixtures include special priority rules, and a creditor may need a fixture filing. The actual collateral depends on the agreement, the borrower’s rights in the assets and state law. A business address at home does not automatically put the house or the owner’s household fixtures under a business UCC lien.

Harder-to-verify revenue and repayment capacity

If personal and business transactions run through the same account, it can be hard to tell how much the business earns. Incomplete records or dependence on one customer can raise more questions. Clear bank statements, current financial reports and a practical repayment plan help the funder understand what is happening in your business.

What helps: Explain why working from home fits your industry, where the work actually happens, and how the business earns steady revenue. Support that explanation with licenses, insurance, customer contracts, invoices, bank statements and an accurate list of business assets and existing liens.

How to Fund a Home-Based Business: 5 Financing Options

When comparing home based business loans, start with what you need to finance. Equipment purchases, day-to-day expenses and gaps between customer payments may call for different products.

Five home-based business funding options: equipment financing, merchant cash advance, short-term loan, unsecured business loans and business line of credit.

1. Equipment Financing

Equipment financing helps business owners purchase eligible equipment needed to run the business.

The loan amount is dependent upon the type and cost of equipment needed. Repayment terms depend on the provider, the equipment’s expected useful life and whether it is used or new. The equipment itself commonly serves as collateral.

2. Split Funding / Merchant Cash Advance

Split funding is a form of merchant cash advance that works on a “pay as you earn” model.

Providers generally structure a merchant cash advance as a purchase of future receivables rather than a loan. In a card-split arrangement, an agreed percentage of your business’ credit and debit card sales goes toward the purchased amount.

On days with higher card sales, the provider collects a larger remittance. When card sales drop, you remit less. Other revenue-based advances collect through ACH debits and may include reconciliation provisions. Review the total cost, collection method, adjustment rights and any guarantees in the agreement.

3. Short-term Loan

Short-term business loans help owners cover immediate expenses and manage cash flow gaps.

Some providers require less paperwork than a traditional bank loan, and you can use the funds for a range of business purposes. Permitted uses depend on the agreement.

Common uses of short-term business loans are inventory purchases, new hires and employee training, equipment repairs, and filling gaps between accounts payable and receivable. A shorter repayment schedule can mean larger payments and higher costs. Repayment may be daily, weekly or monthly, depending on the lender and agreement.

Traditional term loans also have a fixed repayment term, but the interest rate may be fixed or variable. Payments are often monthly. Whether payments build business credit depends on the lender’s reporting, and any prepayment penalty depends on the agreement.

4. Unsecured Business Loans

Unsecured business loans can help home-based owners who do not have specific assets to pledge as collateral. Lenders review factors such as revenue, cash flow, credit and operating history. Product terms vary, and some providers may still require a personal guarantee or blanket lien on business assets.

Depending on the agreement, you can use the funds for inventory, payroll, marketing, equipment or other business expenses. Compare the total cost and payment schedule with the cash your business expects to collect.

Some lenders collect repayments through ACH, which means automatic debits from your business bank account. ACH describes the payment method. Your agreement determines whether payments fall daily, weekly or monthly.

Credit score, revenue, time in business and collateral requirements vary by provider. Some products accept borrowers with challenged credit or do not require a specific asset pledge, but a personal guarantee or a lien on business assets may still apply. Review the agreement before accepting an offer.

5. Business Line of Credit

A business line of credit, also known as a “LOC,” gives business owners access to a credit limit they can draw on as needed. On a revolving line, repaid principal generally becomes available again, subject to the agreement. Lenders generally charge interest on the amount you draw and may also charge fees.

There are two types of Business Lines of Credit:

1. Unsecured Business Line of Credit

Unsecured business lines of credit do not require you to pledge specific assets as collateral, though product descriptions vary. Check whether the lender requires a blanket business lien or personal guarantee.

This can be appealing to home-based business owners with limited fixed assets. Credit requirements vary, and lenders may also review revenue, cash flow and time in business.

In addition, they tend to be smaller with higher interest rates.

2. Secured Business Line of Credit

A secured business line of credit requires business owners to put up assets as collateral in order to obtain the loan.

Depending on the lender, collateral may include inventory, accounts receivable, equipment or other assets. If you default, the lender may enforce its rights against the pledged collateral under the agreement and applicable law.

Both secured and unsecured business lines of credit will require your business to be in good standing.

Lenders typically prefer to work with businesses that are well-established and in good financial standing, thus demonstrating the ability to pay back the loan. Your lender may request financial documents to assess your ability to repay.

Explore a business line of credit for your home-based business with Excel Capital: Apply Now

Can a Home-Based Business Get an SBA Loan or Microloan?

A home-based business may be eligible for SBA-backed financing if it meets the program’s and lender’s requirements. The SBA’s 7(a) eligibility guidance emphasizes an eligible operating business, creditworthiness and reasonable assurance of repayment. A home address alone does not establish eligibility. See our SBA loan guide for an overview.

For smaller needs, including some startups, the SBA Microloan program provides loans of up to $50,000 through approved nonprofit intermediaries. Each intermediary makes its own credit decisions and sets terms. This can be worth exploring if your home-based business does not yet have the operating history needed for other financing.

How to Apply for Home Based Business Loans

One of the benefits that come with alternative lending is a fast application and approval process.

Applications for home based business loans vary by provider. Some alternative lenders offer streamlined applications, but funding speed and paperwork depend on the product and completeness of your application.

Your lender reviews the initial paperwork and may ask for additional documents before making a funding decision.

Prepare these common business documents before you apply:

One-page application
Voided check (for your business account)
Copies of identification for all owners
Proof of ownership: Most recently filed tax return, corporate bylaws or LLC articles of organization
Proof of EIN, such as an IRS EIN confirmation letter; see our Form SS-4 and EIN documentation guide
Recent business bank statements (the number of months varies by provider)
Aging AR report if you invoice customers on net-30 to net-90 terms

Your lender may not need every document on this list. Having current records ready can help you answer questions quickly and avoid delays.

Help the funder verify your home-based business

Also be ready to explain where you perform your work and provide current licenses, insurance, proof of your operating address and customer contracts or invoices. Contractors can include a project backlog and payment schedule. Keep personal and business finances separate, disclose existing financing and liens, and prepare a current profit and loss statement. If customers pay after you complete a job, an accounts receivable aging report can help explain the gap between billed revenue and collected cash.

Home-Based Business Funding with Excel Capital

When comparing funding for a home-based business, look at the total cost, payment schedule and any collateral or personal guarantee requirements.

At Excel Capital, we help business owners explore financing options based on their revenue, operating history and funding needs.

The application process is quick. If approved, some products may fund in as little as 24 to 48 hours after required documentation and verification are complete; timing and availability vary.

Click below to start your application:

Start your application for home-based business funding: Get Started

Hard Money Business Loans and How One Can Benefit Your Business

May 24, 2017 by Nathan Abadi

Hard Money Business Loans and How They Can Benefit Your Business | Excel Capital Management

If you’re a small business owner, you most certainly are aware of the many reasons why you, or any other entrepreneur for that matter, might need a small business loan. The reasons could range from office renovation, purchasing new inventory, up-dating computers or other equipment, or paying unforeseen taxes and other obligations. Or, maybe business has been so good for you that you found yourself shorthanded and need to hire more people, but don’t have the cash on hand to cover the cost of adding personnel.

For small businesses, just as in any other business, cash is king. Having sufficient operating capital can mean the difference between growing your business and simply standing still. In some cases, it could even be the difference between great success and utter failure. Many small business owners, in the early stages of operation, may not have thought that they could get a loan to keep them going until they prospered. Seasoned business owners could have mistakenly assumed that the only place they could go for a business loan was the banks, and they wouldn’t be successful. Even thriving businesses are recognizing that they could benefit from an influx of cash, and these types of loans could be the answer to their problems. Not to worry! There are options. Consider a Hard Money Business Loan.

What is A Hard Money Business Loan?

Hard Money Business Loans are a viable alternative to bank loans for providing necessary capital to companies that may be under-capitalized, growing rapidly, in the middle of a turnaround, or highly leveraged. In many cases, a small business might just require a cash infusion for preventing their growth from coming to a standstill or for getting over a financial hurdle. Using your business’ assets could be the key to obtaining the working capital needed for inventory, equipment repairs and purchases, or anything else your business may need. In short, you would be borrowing against your future business income, therefore, gaining access to that revenue sooner rather than later.

What Can a Hard Money Business Loan Be Used For?

The beautiful thing about a Hard Money Business Loan is that the working capital acquired through it can be used for literally anything as long as it pertains to your business. Many small business owners opt to use their loans for:

Business Expenses and Bills
Cover The Costs Customers Who Fail to Pay On Time
Seasonal Slow-Downs
To Fix Cash Flow Problems
New Hires and Employee Training
Inventory and Equipment Purchases
Marketing and Advertising
Product Manufacturing
Office Space
Research and Development
Unforeseen Circumstances (ie: natural disasters, employee resignations, equipment failure)

What Types of Assets Can Be Put Up as Collateral?

Hard Money Business Loans, as mentioned, are given to businesses that have shown steady and stable operating history. The business must also possess assets that can be financed and have not been put up as collateral to another lending institution. In addition, the company must not have any serious legal or tax issues which could impact the loan. Here are a few other pieces of information to be aware of:

– Accounts Receivable are the main type of collateral used to obtain an Hard Money Business Loan. Other forms of collateral such as equipment, real estate, inventory, and more can be used depending on the alternative lender’s restrictions and requirements.

– The Hard Money Business Loan amount you are approved for is determined by the value of your collateral/assets. Businesses can generally borrow 75% – 85% of the value of their accounts receivable. If the collateral a business puts up is equipment or inventory, they can generally borrow 50% of the value.

– Most businesses are approved for an Hard Money Business Loan in the amount of $500,000, and this number can exceed well into millions of dollars. Alternative lenders offer far lower interest rates than traditional banks, however, these numbers vary depending on the lender.

Applying for a Hard Money Business Loan

You may hear the phrase, “do the due diligence” a lot when researching business loans. In simpler terms, this means doing the necessary research before applying and accepting an offer with a lender. There are thousands of lenders and brokers out there – who can off your a great Hard Money Business Loan. Don’t take everything at face value. Learn as much as you can about each lender you are interested in, compare pricing, read reviews, ask questions, and follow your gut if something just doesn’t seem right. You have the right to protect yourself and your business. The last thing you want to do is put your business in more of a financial bind or have setbacks. Research and knowledge is key. Do your due diligence, and you will be ready to move onto the next step.

Generally, regardless of the industry type, as long as your business has decent financial statements, collateral, customers that pay on time, and reporting systems, obtaining a Hard Money Business Loan shouldn’t be too difficult. An added benefit is that this type of funding solution comes with regular fixed payments and lower interest rates compared to a traditional bank loan. This means less worries and more time to focus on your business and its success!

Typically, most lenders that offer Hard Money Business Loans only require minimal paperwork in order to present your business with an initial approval. As mentioned, your business’ bank account can even be funded in as little as three business days! Here is a list of items to have ready when applying.

Completed application provided by your chosen lender
Four months of recent business bank statements
Four months of recent credit card processing statements (if your business accepts credit cards)
Clear copies of identification for all business owners
Voided check for the business bank account that is to be funded

Keep in mind, that because this type of loan is asset-based, additional documentation will be required, however, it is still much less than traditional bank requirements.Many Hard Money Business Loans have $750,000 to $1,000,000 in collateral requirements.

For more information on Hard Money Business Loans, contact one of Excel Capital Management’s funding specialists at 877-880-8086 or APPLY NOW!

TrakLoans: How They Can Help Your Small Business

March 13, 2020December 15, 2016 by Simon Reed

As a business owner, you understand the importance of having the working capital necessary to grow your business and achieve success. Whether business is booming and you need capital for inventory purchases, expansion, new hires, and training, or you run into some cash flow issues over time and need it to these problems, most businesses will apply for funding at some point. You’re probably a little familiar with many of the alternative funding solutions we offer such as Merchant Cash Advances, Business Lines of Credit, Term Loans, and more, but now, we’d like to introduce to you the TrakLoan.

TrakLoans are a flexible, cash-flow friendly way to access small business capital fast. These loans work particularly well for businesses whose owners value having the amount they remit fluctuate with their daily payment card receivables. TrakLoans are also a stress-free funding solutions because instead of sending a large payment amount once a month, a flat percentage of your business’ credit and debit card sales are automatically remitted on a daily basis. That being said, a larger payment amount is only sent on busy sales days rather than slower days. Additionally, these types of loans have no maturity date and no fixed payment amounts. Thanks to this process, business owners can stay 100% focused on growing their business rather than repaying a loan. There are no checks to write or harassing phone calls coming to your business. The payment process stops automatically once the TrakLoan is repaid in full.

To add to the benefits, unlike traditional banks and lenders, alternative financing companies, such as Excel Capital Management, that offer TrakLoans have minimum qualification requirements. All that is required to get started is a completed one-page application form. No personal collateral is needed to qualify, and poor credit is not a deal breaker. For more information on TrakLoans, APPLY NOW!

Funding: Venture Capital vs. Working Capital

February 19, 2020April 7, 2016 by Maria Khatiashvili

Most business owners will apply for some sort of capital at least once over the business’ lifetime. This capital can be used for various reasons at various stages of the business life cycle: business start-up, expansion, equipment, purchases, hiring, etc.. When it comes to the growth of any business, money is essential. What the capital is being used for determines just what type of capital it is – venture or working – and how one goes about acquiring it. No matter what though, as a business owner it is important to do your homework and know what type of funding you are applying for and how it can affect your bottom line in the long run. Let’s take a look at the difference between venture and working capital funding and the funding process for each.

VENTURE CAPITAL FUNDING

Venture Capital is normally sought after by up and coming business owners that are early in the life cycle of their endeavors – startups and seed stage – but can also be used by business owners who are later in the business cycle but are looking to fund new ideas. If these types of business owners can’t get the money from a friend or family member who believes in their idea (business means big bucks, and a lot of times close acquaintances just can’t help out) they are usually able to do so through a Venture Capital investor who strongly backs their business plan. What complicates this process is the fact that most investors will want to see revenue generated for the long-term. They are now part owner and in it for the long haul just like the main business owner themselves, generally looking for a return of at least 5x their initial investment amount.

Venture Capital investors or companies will analyze to see if there is a market for a business owner’s idea. If they feel that your business won’t be success, they most likely won’t take the risk of investing any money into it at all. Their goal is to see a big profit and have a hand in many major business decisions. It’s usually not simply a labor of love. Expect for investors to ask for a C-Level title and/or seat on your board of directors if you have one. At the very least, they will usually ask to be an “owner.” This results in relinquishing full control, ownership and an agreed upon percentage of future earning until you have enough capital to buy them out.

When it comes to qualifications, Venture Capital investors or companies typically only fund businesses in the amount of $1M or more, and also only fund specific industries which puts limitations on many business owners. They tend to look for big industry-specific companies with big, commercial ideas, a strong team, and some existing momentum and paying customers. This can be great, however, if you are just starting out, run a company on your own, or don’t necessarily have the plan to back up such a large sum of money, this can prove to be extremely overwhelming. Garage Technology Ventures, an early-stage venture capital funding company highlights the specifics of these qualifications in their article Critical Factors for Obtaining Venture Funding. Aside from all of this, finding a reputable investor in itself can be a tough task. You should always do extensive research to ensure the investor has you and your business’ best interests at heart. Vivek Wadhwa’s article, Venture Capital: The Good, The Bad, and Ugly on Bloomberg.com highlights some other important factors when it comes to considering Venture Capital. Check it out.

WORKING CAPITAL FUNDING

Working capital is sought after by business owners for any number of reasons during any stage of the business’ lifetime – including the startup stage (normally lenders require a business must be operating for at least 3 months, but this can still be considered the startup stage). The capital is usually used for equipment purchases, new hires, expansion, inventory, and more. While lenders generally do care about the product or service the business offers, what business owners do with the capital (within reason) is their business. They are no way, shape or form now an owner after funding a company and don’t require that you list them as an owner, sponsor, or member of your board of directors. You make all of the business decision and once the funding is paid back their is no further obligations.

Typically, to qualify for working capital funding by a lender, a business owner must provide 4 months of recent bank and credit card statements (if applicable) to show their ability to pay back the advanced money. This capital acquired is generally structured as either a loan with fixed payback terms and fees or a purchase of future receivables at a discount rather than an investment expected to generate 5x the initial amount. Most business owners sleep a little better knowing this much and even reach out for additional capital numerous times over the course of their business’ lifetime. Lenders tend to develop genuine and trusting working relationships with many business owners and offer various financing solutions to work harmoniously with a business.

At Excel Capital Management, we offer many different financing products to help you obtain the Working Capital your business needs to grow! Our funding specialists will work diligently to ensure that you receive the best products available to achieve business success!
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