Many small business owners, or work at home professionals do not pursue commercial loans to support their businesses. I know one person in particular who ran a successful company from her basement. She made maternity bras which had a unique and comfortable design.
Within three years she had orders from around the world, and larger retailers were taking an interest - then the bomb hit. A neighbour complained and the township told her that her business no longer qualified as a cottage industry business.
Her reaction - to shut down. I later talked to her and asked if she had tried for one of the Commercial MortgagesShe just shook her head. It was sad. She had the equity in her house for a down payment, and the sales to support paying for a small industrial business.
She also lived in a 'factory ghost-town.' There were at least ten small abandoned factories she could have purchased for under $80 000 (yes, you saw that right). They were under 5 000 sq feet, but all would have suited her needs.
This would have been even more tragic if it happened now, in the aftermath of the sub-prime melt down. The banks need to lend money now. They are looking for businesses (not new families) to invest in.
My friend made the classic blunder. She never made the transition from work at home creator to business woman. If she had, the concept of applying for a commercial mortgage, and even incorporating, would not have been so alien. Banks are not looking for companies that are making millions. They just want solid businesses with a proven track record... and an ambitious owner.
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