Working from Home: Finding Start-up Funds and Making a Business Plan
by Alyssa Quintero

Teleworking from the comfort of one’s home sounds like the perfect solution, especially if transportation and accessibility issues make it difficult to work outside the home.

Whether you’ll be teleworking (also called telecommuting) for an outside employer or starting a home-based business, here are two key ingredients for getting started:

• finding funding to set up a home office and purchase business-related equipment
• writing a business plan.

It takes money to make money

A little-known funding option that can help ease the financial stress of home-based work is the Access to Telework Loan Program, a federal-state program that grants low-interest loans to people with disabilities in order to purchase business-related equipment.

Currently, telework loan programs operate in 19 states and one U.S. territory (see box at end of article). People on fixed incomes who don’t qualify for traditional bank loans for business equipment may find the telework loan programs more receptive to their applications. For example, many programs will work with applicants receiving Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI).

While the overriding purpose is the same – providing low-interest loans for people who work from home – loan amounts and repayment terms vary from state to state.

Typical equipment purchases include communication equipment, computer equipment and software, and office supplies and furniture. Assistive technology devices also are eligible. Some programs also grant loans for home office modifications and vehicles.

“The loans help people purchase equipment that will allow them to conduct their business, and that’s how you could justify a telework loan for a vehicle,” said Eric Guidish, telework program coordinator for the Illinois TechConnect Low-Interest Loan Program. “It doesn’t have to be AT equipment related to the disability.”

The telework loans are similar to the Alternative Financing Program (AFP) loans available in 33 states and used to purchase assistive technology. (For a detailed article on that program, see “Funding Freedom,” Quest May-June 2006.)

“Character scoring”

In evaluating a loan application, telework programs look at the whole picture – credit score, debt, monthly income and bills associated with a person’s disability.

Patti Lind, Iowa’s telework program director, explained, “It’s a blend between credit scoring and character scoring. We take into account the individual, not just the numbers, and their disability issues, which usually are reflected in the credit report.

“We look at their functional capacity to operate the business and their ability to repay. We’re most interested in what is amenable to the borrower and what will work with his budget.”

And, if your home business is a start-up company, Lind advises, “As an alternative lender, we have means and methods of helping to capitalize businesses that no one else would. If you go into a bank, they rate capitalizing startups so heavily in risk that it’s hard to get those loans.”

More funding resources

Although Telework loans are available in only 19 states and one territory, the Abilities Fund offers free assistance to people with disabilities throughout the country who are interested in self-employment and business ownership.

With offices in Iowa, Nebraska and Washington, D.C., the national Abilities Fund works with small businesses that require less than $35,000 to start or expand. Although the program doesn’t provide direct financial assistance, it connects people with local resources and business professionals.

Also, the Abilities Fund serves as a liaison between the loan applicant/borrower and a national lending partner that grants small business loans. The program will guarantee loans with its lending partners, including some 400 microlenders across the country, says Patti Lind, who also serves as the Abilities Fund director.

Lind said 75 percent of callers are searching for financial resources to start a business. She and her staff receive hundreds of requests for microenterprise loans. (A microenterprise is defined by the U.S. Small Business Administration as a business consisting of five or less employees, and one that requires capital of $35,000 or less.)

For more information, call (888) 222-8943, visit www.abilitiesfund.org, or e-mail loans@abilitiesfund.org.

Additional help may be found at the Small Business and Self-Employment Service, located at the Job Accommodation Network, which provides a listing of state economic development and funding sources pertaining to self-employment and small business ownership. Call (800) 526-7234, or visit http://www.jan.wvu.edu/cgi-win/TypeQuery.exe?7304, and search by state for financial assistance programs.

Business plans 101

A well-designed business plan is a crucial part of the funding puzzle, especially when you’re applying for telework or small business loans. The plan helps establish your credibility and seriousness about starting or expanding a home business.

Kathy Gilman, telework program director for the Washington Assistive Technology Foundation based in Seattle, explained, “You need to have a clear idea of what you want the business to be. It may take some time to write a sound business plan, but people are more likely to be successful if they go through a good planning process.”

Telework loan programs typically suggest that potential applicants work with a local small business development center in order to formulate a solid business plan. It doesn’t have to be fancy, but it needs to contain pertinent information that loan programs expect to find in the application. For example, if it’s a start-up business, many programs require an income projection.

Small business development centers often provide free assistance to people with disabilities who need to write a business plan. To locate one in your area, visit the U.S. Small Business Administration state map at www.sba.gov/aboutsba/sbaprograms/sbdc/sbdclocator/index.html, or call (800) 827-5722.

Patti Lind with the Abilities Fund explained, “We’re looking for content. Applicants really need a sustainable business idea in the business plan.”

For example, the Abilities Fund offers several online resources, including “The 5 C’s: Building Blocks of Business Planning,” which focuses on developing a plan that includes sections about concept, capacity, customers, competition and cash flow. For more information, contact The Abilities Fund at info@abilitiesfund.org.

While the staff generally refers clients to local organizations that provide direct assistance, they will work with people over the telephone and via e-mail, answering questions about funding and writing business plans.

For an expanded list of online business planning resources, see the Quest Extra story “Telework Resources.”