How do I know how much money I need?

• Monetary needs are generally determined by adding the amount of money needed for upfront costs such as buildings, equipment, inventory, etc. to the expected operating expenses for a period of time, such as six months or a year. These operating expenses should cover the owner’s salary as well as the debt service on any loans. From this data, develop a detailed monthly cash flow projection covering one year and an annual projection covering three years. This process helps ensure the borrowed money can be repaid and the business will prosper. The SBDC will be happy to help you with this procedure, for free!

Is my credit score important when applying for a loan?

• Credit scores are increasingly becoming a critical decision factor in successfully obtaining a loan. Most financial institutions consider the way a person handles his or her personal credit as a good indicator of how business credit will be handled. Prior to applying for a loan you should obtain a copy of your personal credit report along with your credit score. Even with a great business plan, a poor credit score can prevent you from getting a loan. The SBDC can help you assess the impact of your personal credit score on business financing.

How do I find out what my credit score is?

• You can obtain your credit score from each of the three major credit-reporting agencies as well as other independent organizations. Unlike your free credit report allowable twice a year under Georgia law, you may have to pay a fee to obtain your credit score. Some independent organizations may offer a free credit report and credit score, but there is often a catch. It is important that you check these organizations for references before you provide them with personal information. For additional information, click on reference

Are there government grants for my business?

• Generally, there are no government grants available for small businesses. In fact, the term grant may be a misnomer, since grants simply pay for services the government needs done. Most government grants are awarded to non-profit organizations or local governments, not to private companies. An exception could be the SBIR or STTR programs, which fund the research and development of technological innovation that meets specific government needs. For more information on these programs, visit the SBIR website.

What documents will I need to apply for a loan?

• Typically, you will need the following documents: a credit report, personal financial statement, tax returns for the last three years (if currently in business, both business and personal tax returns), as well as copies of contractual agreements (for example, a copy of a lease). Depending on the situation, lenders will likely want to see a business plan, or at a minimum, financial statements demonstrating how the loan will benefit the business and be paid back. If you are seeking financing for your business, contact the SBDC for assistance.

Does the SBDC make loans?

• The SBDC does not make loans. However, the SBDC can assist you in preparing to obtain financing. Writing a business plan, making cash flow projections, and suggesting various sources of financing (including SBA loans) are all available to you.

Will the US Small Business Administration lend me money?

• No, the SBA does not make direct business loans. However, it does provide guarantees which eliminate some of the risk to its lending partners, such as banks, community development organizations and microlenders. SBA partners lend money to small businesses based on the guidelines for each of its three loan programs. The SBA also makes some direct loans under very specific circumstances through their Disaster Loan Program. For more information, visit the SBA Disaster Assistance page.

Are there non-traditional loan sources?

• Yes. There are several kinds of non-traditional sources of financing such as microlending programs, angel investors, venture capitalists and various other non-bank lenders. For ideas about non-traditional financing sources, contact the SBDC.

What are angel investors and how do I find them?

• An angel investor is a wealthy individual who provides capital for early stage or start up businesses usually in exchange for an ownership stake in the company. Angels often provide funding for businesses that need more capital than is available through personal and family investments but are not large enough to attract venture capitalists. Angel investors often organize themselves into angel networks or angel groups to share research and pool their own capital. For more information on angel investors, visit the Angel Capital Association website.

How can I get access to venture capital?

• As a rule, venture capitalists are not looking to fund small businesses because the large amount of dollars they typically invest (millions) are beyond the scope of most start-ups. Also, VC\’s invest in companies that they believe will generate huge returns in a relatively short period of time. If you think your company would be attractive to VCs, the Georgia SBDC can help you create the financial projections you will need as well as help you identify interested venture capitalists.

Can I get an SBA guaranteed loan to refinance present debt?

• Yes, if the debt is a business debt (i.e. not personal) and the refinance must result in a minimum of 20 percent improvement in cash flow.