How do I know how much money I will need?
- Funding needs are usually determined by adding the amount of money needed to cover one-time startup costs including buildings, leasehold improvements, equipment, inventory and working capital for expected operating expenses. For additional information, contact your local SBDC.
How do I get a loan?
- Lending institutions typically look for the 5 C\’s when evaluating loan applications. The 5 C\’s are credit, character, collateral, cash and capacity. Lenders will expect business owners to contribute their own money to the development of the business before they will consider loaning money to a business owner. They also make decisions based on credit score, good character and ability of the business to pay back the loan. For detailed instructions on developing loan proposals, refer to the SBDC publication Mastering Loan Proposals. For further assistance preparing a loan proposal, contact your local SBDC.
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 a list of some non-traditional financing sources, click on resources link.
What documents will I need to apply for a loan?
- Typically, you will need a 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, please contact an SBDC office for assistance.
Is my credit score important when applying for a loan?
- Credit scores are a critical decision factor in evaluating a loan application. Most financial institutions consider the way a person handles his or her personal credit 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 asses the impact of your personal credit score on business financing.
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. One 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, click on reference.
Does the SBDC provide financing?
- No. The SBDC is an economic development program of the University of Georgia system and does not lend money. SBDC Consultants can help you identify sources of funding to best fit your financial needs.
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. Contact the SBDC for more information.
Can the SBA 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 does make some direct loans under very specific circumstances under their Disaster Loan Program.) For more information, click on reference.
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, click on reference.
How can I get access to venture capital?
- As a rule, venture capitalists do not lend to small businesses because the large amount of dollars they invest (millions) are beyond the scope of most start-ups. In a situation where venture capital is an option, investors will look to share in the profits of the business and will expect a huge return in a relatively short period of time. For more information on venture capital, click on reference.