Although banks are often eager to extend home improvement loans for major renovations, it's often tougher to find a good deal on financing for little projects. Likewise, if you're trying to sell a property that's "upside down" and you can't tap any more of its equity, it's impossible to find a lender who will offer a home improvement loan.

Fortunately, there are two great options for home improvement loans from unexpected sources. 

Your first option may already be staring at you from the mailbox. If you currently make payments on a car, boat, or other large piece of property, your finance company is often happy to extend a short term personal loan based on your existing relationship. Security analysts suggest that you should only contact companies with whom you already do business. Many fly-by-night operations claim to offer unsecured renovation loans, while masking abusive terms and high interest rates. 

Online Communities Fund Alternative Renovation Loans
If banks and other lenders have denied your request for a home improvement loan, you can turn to the Web for help. A growing number of social networks facilitate personal loans by pooling resources from thousands of members. Using a service like Prosper or Lending Club, your $10,000 home improvement loan could be funded by a hundred members chipping in $100 each. Your interest rates and repayment terms are based on your credit history, and monthly payments are withdrawn automatically from your checking account.

While you won't get a home improvement loan as large of as you would through a mortgage lender, you can usually secure enough to handle a modest budget for kitchen renovations or for replacement windows. Regardless of the source, personal finance experts caution lenders to borrow only what they can afford to repay over a relatively short period.

Sources
Austin American Chronicle