Although recent reports indicate that bank lending to businesses has picked up since the recession officially ended two years ago, Federal Reserve Chairman Ben Bernanke said as recently as November that small businesses are still having problems getting the capital they need. Continued tighter credit not only hinders daily operation for existing small businesses, but it also creates an obstacle for startups.

Is Now the Time to Start a Business?

With unemployment still high and the economic outlook bleak, one can hardly be blamed for thinking that now is not the ideal time to start a business. While failure rates for new businesses are high, the fact that so many people are unable to find success in the traditional job market might mean that now is actually the best time to look at an alternative. If you have a good idea and the perseverance to see it through, success can come in good times or bad.

While starting a small business sounds like the perfect answer to a tough job market, how can you finance a business startup when credit is tight?

The Home-Based Alternative

One alternative is to start a home-based business. Success stories abound of entrepreneurs riding their fledgling business concept all the way from their kitchen table or garage to an IPO.

One obvious advantage to starting a business in your home is that you can start small. What this means in a climate of tight lending is that your new business will probably require much less startup capital. The slashed overhead of a home-based business can be passed on to your consumers, increasing your competitive advantage through lower prices.

While starting a business at home usually requires only limited startup funds, you will still need to consider financing sources that could include banks, credit cards, family, friends and government programs and agencies. The important point about a home-based business startup is that you can be more flexible about financing and scale your initial business activities to match the money you have available. A home-based business allows you to be creative and nimble with your entrepreneurial energy and your business finances. As your business grows, you can use some of your profits to help finance further growth.

The Competitive Mobile Advantage

One major factor facilitating this home-based business nimbleness is the widespread availability and use of the Internet. With its availability on mobile devices, the Web gives business owners unprecedented flexibility to operate no matter where they are. This ideally suits the home-based business venture because their operations are not limited to any single location.

Potential customers have also been empowered by mobile Internet access, with the ability to browse products, ask questions, interact with other buyers and make purchases while on the go. This means that you can reach more customers with more products for fewer dollars, which translates into less reliance on hard-to-come-by bank financing.

It’s Still Not Easy

Don’t be misled into thinking that a home-based business startup is easy or without any obstacles. Like any business, there are risks to home businesses; without a viable idea, a solid business plan and hard work, chances for success are slim. Most successful home entrepreneurs start with a passion for their product or service and build their business around good customer service.

A Way Around the Credit Roadblock

While politicians debate the best way to help small businesses navigate a sluggish economy, entrepreneurs will continue to look for ways to successfully start and operate their businesses. A low-cost, flexible home-based business approach can help entrepreneurs bypass the roadblock of tight bank credit.

Before starting any type of business, it is a good idea to talk with your financial advisor or tax professional. These experts will help ensure that you structure and plan your business with the best chance of success.