Is financing a business the same as financing a single family home?

i mean the requirements , if i'm approved for a certain amount on a home loan, would it be the same amount if i decided to by a business?

Financing businesses and homes are very different for the following reasons.

Let's look at a home first and then we'll compare:
Determining value:
A real estate appraiser needs to inspect the home and put a value on it for the bank. (The 'Appraisal'). This is determined by a combination of like properties in the neighbourhood and what they recently sold for and also by some techniques which involve determinig the square footage of the home by measuring its dimensions and then doing a calculation as to what its value is and adding the value of the land to it + any extras for special features like a pool, air conditioning or other amenities,
The bank then based on market conditions decides to lend a certain percentage of the value with the house as collateral so that if you default on the loan the bank takes legal possession of the property which in most market rises in value over time so th ebank feels safe about getting their loan amount back even if they have to sell the home at a 'quick sale'..

With a business, because it involves customers, marketplaces, the product/service being offered, location of the premises, and competition, it is generally very difficult to place a value on the business. There is also the added complexity of your ability to manage the business and make it a success based on your knowledge and experience.

That is why the bank requires a business plan which is nothing other than your documentation of exactly what the business is based on by way of product/service offered, customers to be targeted, location, competition, your projections of how much you are going to sell and how mnuch your costs will be, how the cash will flow to show that you will always have enough money to pay your bills on time including the loan and your personal ability to make it a success.

In both cases your personal credit history is an important factor since it tells the potential lender how good you are at paying your bills on time, how much debt you have and whether they think you are a good credit risk.

The basic difference is that if the business fails or if you default on the loan, the value of the business may be very much less than the loan even if all of the loan was used to acquire equipment and property, since over time, equipment decreases in value due to wear and tear and if the business is 'going down the tubes' its market value may be substantially beneath the loan amount. So the collateral against the loan is not as 'fixed' as in the case of a home and the decision is a riskier one for the bank.

Hope this helps

No. It is very hard to get a loan to finance a business, because running a business is very risky. If you do not make money in your business, your business would worth nothing. And you could end up losing everything. A house is different. It is very secured. Even if you lose your job, the loan is still secured with the property. The lender has nothing to lose. So, it is always easier to finance a home than to finance a business.

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