Banks are probably the most visible source of ready financing, and you should already have contact with a few through your personal accounts. Although banks are logical places to go in order to raise capital, they are notoriously conservative, especially where start-up home-based ventures are concerned.

Most banks will require some sort of collateral as security for a loan. Banks will also want to know the purpose of the loan, so be prepared to show them your business plan. Your personal background will have a direct bearing on how your loan applications are treated.

Excerpted from Starting a Home-Based Business