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Work From Home - Discussion - 2

Should a new home business take on a loan? Does the new work from home activity need a loan? Many people who start a home business seem to think that if they start it customers or clients will automatically come. If you have a loan then the pressure on that business and you personally to perform is manifested in stress.

I have always maintained that the beauty of any home working business is the shear fact that the start up costs are so low and if you simply are unable to gather the few hundred pounds required to get it going then shame on you. I personally would avoid having a loan to start a home business at all costs.  I would even be prepared to work at Burger King for a year in order to set aside some savings in order to finance my work from home venture.

However, due to the competition for home owner loans the interest repayments are relatively cheap from the major banks and finance houses.  An unsecured loan could be just the initial fuel required to blast that home business into success but you do need to be sure of your market and pretty certain that the investment in new items of equipment for example will reap rewards in the near future.



Many new business owners start a home business by simply extending their existing home mortgage.  This can be a great way to finance the initial start up of a home business and the repayments can be insignificant when absorbed into the mortgage term.

The only adverse risk of extending a mortgage to finance a home based business is if the existing mortgage is relatively large and already difficult to service on a month by month basis. Unless you have a other money or savings set aside for emergencies for example, you will be on a very thin tightrope. Unless your business starts earning money within the first few months, your new home business will be doomed to failure.

There really isn't any need to take on a new cheap mortgage to start a home business unless you are releasing equity from your current property. Again, this home owner loan or remortgage should be kept to a minimum and only used as and when required.  Simply pulling out several thousand pounds sat inside an easy access account can be very tempting for non business essentials so don't be tempted.

Compensation claims are an ever increasing hazard for businesses. The public are always seeking blame from someone else for their own irresponsibilities. Taking responsibilities for your own actions or inactions seems to be waning as time goes on.  Can a new home business be exposed to this sort of attitude and run the risk of being sued? In theory yes but highly unlikely.  You are possibly more at risk of some nutter claiming compensation for tripping on your drive than suing you for negligence over an ebook you may have sold them.

However, the potential risk of this growing trend for claiming compensation for personal injury claims for example does need to be assessed for any new work from home business.  Most of the risks can be set aside utilising properly worded disclaimers or confirming things in writing.  There is insurance cover available to cover such eventualities based on your actual risk assessment but likely to be expensive.

Generally speaking if you do not have any savings or assets to protect then the chances of someone taking you to court for a compensation claim is highly unlikely due to their own expenses involved in pursuing such a compensation claim. However, if your are of value then completing some form of risk assessment before you start your home business is vital.

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