Financing a New Business

Obtaining a Small Business Loan

Types of Financing:  Debt Financing or Equity Financing

What Lenders Look For

Small Business Administration Financing

Obtaining a Small Business Loan

Start with a good Business Plan and Cash Flow Projections.

• To be successful in obtaining a loan, you must be prepared and organized.
• You must know exactly how much money you need, why you need it, and how you will pay it back.

You will need good credit.

• If there are problems on your credit report that can be remedied before meeting with a banker, do so.  A lender may be able to make exceptions if you can document that a negative report was due to circumstances beyond your control. 

Don't expect 100% financing.

• You are going to have to put some of your own money into the business, and the more the better.  Expect to invest at least 15-20%.
• The bank can require you to personally guarantee the loan. If you are unwilling to risk some of your own money, the lender will not risk the bank’s.

The process is not quick.

• If you must have the money to open by a certain date, make your loan application as far in advance as possible. Be prepared to shop around. Be prepare to answer questions.

Don't expect "free" money.

• With very few exceptions—usually local tax incentives—the government does not give grants to start a for-profit business.

The Small Business Administration does not lend or give away money.

• The SBA makes loan guarantees that provide security to lenders so that they will in turn lend money to small businesses. Interest rates and repayment terms are set by the lender. Your SBDC business advisor or lender can provide additional details about SBA loans.