Financing a Business
Where do I go to get money for my business?
There are many sources for business financing including bank loans, SBA guaranteed loans, private money and collateral money, just to name a few.
If I apply for a bank loan, what are the basic requirements of the bank?
There are six C's banks looks at: Credit worthiness of the owner/owners, Cash investment of the owner(s), Collateral, Capacity to repay, Character and Commitment. It is very important to understand the details of each of these before you speak to a banker. The SBDC can help you to understand and hence be better prepared.
What effect would a bankruptcy have on bank financing?
Any bankruptcy within the past 10 years could be a major negative for bank financing. There are some exceptions under extreme circumstances.
Do I need a formal Business Plan?
Yes, the SBA and most banks require a Business Plan. A Business Plan explains the business's goals and objectives as well as illustrating the ability to repay the loan. The SBDC can help you write a business plan if you do not already have one.
What is the difference between a bank loan and an SBA loan?
There is no difference between a bank loan and an SBA loan. The SBA does not loan money directly to the business or owner. They guarantee the loan given to you by the bank in order to reduce the bank's risk. It is up to the discretion of the bank to ask for an SBA guarantee and only participating banks are involved.
What if the bank says no? (Alternatives to bank financing)
Banks fund less than 50% of all money for small business ventures. The balance comes from friends, family, equity in assets (a home) owned by the owner(s), credit cards and venture capital.
What is the difference between Venture Capitalists and Business Angels?
Venture Capitalists are usually equity investors in a business. They typically seek to invest over a million dollars in companies with a potential for significant growth, such as those in the high technology industry. A Business Angel is usually an individual who loans money to a business with the expectation of being repaid.
SBDC @ Palm Beach State
3000 Saint Lucie Ave. Ste AD411
Boca Raton, Fl 33431
t 561.862.4725 | f 561.862.4727
© 2009 Small Business Development Center at Palm Beach State College
t 561.862.4725 f 561.862.4727 | sbdc@palmbeachstate.edu
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