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Kiplinger.com:

Going solo
Franchises, however, are but a part of the small- business universe. Some 52% of small businesses are home-based; some 21 million have no employees beyond the founding entrepreneur. Such businesses range from eBay sellers and dog walkers to tutors, real estate agents and consultants, including government contractors. While employer firms tend to move in lock step with the economy, one-person enterprises tend to move in the opposite direction.

Says economist Brian Headd, of the Small Business Administration: “Non-employer firms have the highest growth when the labor market struggles and the lowest growth when the labor market is doing well.”

Because loans are a small part of such start-ups, he sees no reason why “the data won’t follow similar patterns” in the current recession.

Indeed, retired small businessman Martin Lehman, who counsels would-be entrepreneurs at Score, an SBA affiliate, says business has increased. He’s seeing a lot of people teaching children at home or trying to open a studio to help people with exercise or personal training.

Getting a loan
For budding magnates who need to shake the money tree to get started, the stimulus package could help. The bill sent $730 million SBA’s way, some of which will be used to temporarily eliminate or reduce fees on SBA loans. And the SBA will now guarantee 90% of small-business loans made by banks, up from 75%. The legislation should also boost micro loans of up to $35,000 for firms with fewer than ten employees, provide refinancing opportunities for loans on land or machinery, and provide 100% SBA guarantees on bridge loans of up to $35,000 to help firms having trouble paying non-SBA loans.

In this economy, friends and family, by far the most common sources of start-up funding, may not be as easy a touch as they might have been a few years ago. Likewise, lenders who take a flier on a friend or a brother-in-law should consider such loans more gift than investment. Still, for those willing, Prosper and Virgin Money can help structure and administer such loans, so that your business arrangements have less chance of wrecking your Sunday dinners.

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